Alcatel-Lucent reports rare profit for 3rd quarter

Last Updated: Thu, Nov 04, 2010 11:40 hrs

Telecommunications equipment maker Alcatel-Lucent SA on Thursday reported a rare profit for the third quarter after losses last year, helped by recovering demand for wireless and growth in Asia and eastern Europe.

The company, a top supplier to U.S. and European phone companies, said its profit was €25 million ($35 million) in the third quarter, compared with a loss of €182 million in the same period last year, when customers cut back on spending due to the recession. Sales rose 10.7 percent to €4.07 billion, the company said.

Shares sank despite the long-awaited positive numbers, and were trading down 3.3 percent in Paris morning trading at €2.45.

Alcatel-Lucent maintained its outlook for the full year. It has said it expects adjusted operating margin, its preferred measure for profitability, of between 1 and 5 percent this year.

CEO Ben Verwaayen said the supply chain remains stretched, and that component shortages that have plagued the sector would likely continue another couple of quarters.

Overall, however, he was optimistic. "We are ready for a very strong quarter four," he told a conference call Thursday. "We see growth coming back to the market" in 2011, he said.

He said demand for broadband networks is the key trend in all the company's markets, and reflects a "massive change in the way consumers behave." Phone companies are trying to upgrade networks to cope with growing demand for smart phones such as the iPhone and BlackBerry.

The quarter's growth included recovery in U.S. markets but also rising sales in India, Russia and China and eastern Europe, Alcatel-Lucent said.

Profit was also boosted by a one-time gain on retirement costs. Thursday's report marked only the third quarterly profit for Alcatel-Lucent since it was created by the 2006 merger of Alcatel and Lucent Technologies.

The company is headquartered in Paris and has its North American operations based in Murray Hill, New Jersey.

Rival LM Ericsson AB reported a more than fourfold jump in profits last month largely on the back of lower restructuring costs. The world's top mobile phone maker, Finland's Nokia, reported a third-quarter net profit of €529 million ($733 million), in contrast to a net loss last year.

More from Sify: