Alcatel-Lucent's revenue grows, loss shrinks

Results boosted by networks group, as traffic growth in the U.S. spreads to other parts of the world

Alcatel-Lucent reported growing revenue and a shrinking loss for the first quarter of 2011, helped by operators' need for more capacity in their fixed and mobile networks, the company said on Friday.

Revenue for the period, which ended on March 31, was €3.7 billion (US$5.4 billion), up 15.2 percent year-over-year. However, that wasn't enough for the company to turn a profit; its net loss was €10 million, helped by a one-time €69 million credit related to its US pension plan, according to a statement. But that is a huge improvement over the €515 million loss the company reported a year ago.

The company didn't dig a hole for itself in the first quarter, which is a nice change, CEO Ben Verwaayen said during a conference call.

Verwaayen's goal since he arrived late 2008 has been return the company to "normalcy" by the end of the year, which includes making a profit, according to a spokesman. With a good start to the year, Alcatel-Lucent says it will grow faster than the market in 2011.

Alcatel-Lucent is seeing a couple of trends that is helping improve its fortunes. The data growth that started in the U.S. is now spreading to other parts world, including Europe and China, Verwaayen said. A growing number of countries are have also recognized the need for broadband to improve national competitiveness, which will give the sale of fiber network equipment a boost.

Recently, a report surfaced saying that Alcatel-Lucent is planning to sell its enterprise applications business, which increased its revenue by 5.2 percent over the year-ago quarter, reaching €285 million.

The company doesn't comment on rumors and speculation, according to Verwaayen, who added that the enterprise sector is a great business that Alcatel-Lucent is investing in.

Alcatel-Lucent gets the largest share of its revenue from the Networks group, where the best performer was wireless, which grew sales by 36.5 percent year-over-year. Growth was concentrated in the Americas and was driven largely by CDMA EV-DO and by LTE (Long-Term Evolution). Together with Ericsson, Alcatel-Lucent is building Verizon Wireless' new LTE network.

Overall, revenue growth in North America was about 40 percent year-over-year. In Europe, sales dropped by 1.8 percent, while Asia Pacific and the rest of the world grew by 1.7 percent and 13.3 percent, respectively.

The company is seeing some improvements in the wireless sector, but has to continue and push forward, according to Sylvain Fabre, research director at Gartner's Carrier Network Infrastructure group. For example, competitors like Ericsson and Huawei are signing more commercial LTE deals than Alcatel-Lucent, Fabre said.

As a comparison, Ericsson reported net income at 4.1 billion Swedish kronor (US$660 million) for the first three months of 2011.

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Mikael Ricknäs

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