Alcatel-Lucent returns to profit in 2011

AP News
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Posted: Feb 10, 2012 7:57 AM
Alcatel-Lucent returns to profit in 2011

Telecommunications equipment maker Alcatel-Lucent said Friday that years of cost-cutting helped it make an annual profit in 2011, its first since its trans-Atlantic merger in 2006.

The Paris-based company reported a net profit of euro1.1 billion ($1.46 billion) in 2011, compared with a net loss of euro334 million in 2010.

"Overall, this concludes a second year of strong improvement in our results, and leads to the first positive full-year net results for Alcatel-Lucent since the merger," CEO Ben Verwaayen said in a statement.

Sales to telecommunications network operators fell off sharply over the year as carriers cut back spending amid the worsening economic outlook, especially in Europe.

The company forecast further cost-cutting this year to improve on the 3.9 percent adjusted operating margin achieved in 2011, almost double the year-earlier figure but well below the 5 percent level that the company had originally targeted.

Alcatel-Lucent supplies telecommunication carriers such as AT&T, Verizon and France Telecom. It competes with European rivals such as LM Ericsson AB of Sweden and Nokia Siemens Networks of Finland.

With North American headquarters in Murray Hill, New Jersey, it has struggled for years to return to profit. Total losses since its trans-Atlantic tie-up have topped euro9 billion.

Sales were down nearly 13 percent in the fourth quarter with double-digit declines in Europe, North America and Asia. For all of 2011 Alcatel-Lucent sales were down 2.1 percent to euro15.3 billion.

Sales were particularly weak in the wireless division. The largest of the networking businesses, it saw sales slump by over a fifth in the fouth quarter, which the company blamed on slowing spending by operators, especially in North America.