Thursday, May 5, 2011

Alcatel-Lucent (NYSE: ALU): Q1 Earnings Preview 2011

Alcatel-Lucent (NYSE: ALU) is scheduled to release its first-quarter earnings after the closing bell on Thursday, May 5, 2011. Analysts, on average, expect the company to report a loss of 5 cents per share on revenue of $5.41 billion. In the year ago period, the company reported a loss of 28 cents per share on revenue of $4.49 billion.

Alcatel-Lucent provides products, solutions, and transformation services that enable service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide.

In the preceding fourth-quarter, the Paris, France-based company's net income was 340 million euros or 0.13 euros per share compared to 46 million euros or 0.02 euros per share. Earnings per ADS for the three-month period were $0.17 versus $0.03 a year ago. The fourth quarter adjusted net profit was 385 million euros or 0.14 euros per share versus 85 million euro or 0.04 euros per share. Earnings per ADS improved to $0.19 from $0.05 a year earlier. Quarterly revenue grew to 4.86 billion euros from 3.97 billion euros a year ago.

Alcatel-Lucent was created from the merger of France’s Alcatel and Lucent of the U.S. back in 2006, but in the following years the company struggled to streamline its portfolio and resolve cultural differences, resulting in massive losses. Since his arrival in late 2008, Chief Executive Ben Verwaayen has made it his mission to turn the group into a “normal” company focused on its business and customers. He has drastically reduced the number of products it offers, slashed jobs and appeased internecine wars.

Now Alcatel-Lucent is starting to reap the benefits of its transformation. At its last earnings call in February, the company said it expects strong profit and market improvement in 2011. ALU said that it is confident of growing faster than its addressable market. The company also targets a significant increase in profitability. However, the company lowered its adjusted operating margin outlook for the year. The group now aims for an adjusted operating margin of more than 5%, compared with an earlier forecast of 5% to 9%.

The company has benefited from explosion in data traffic —fueled by the democratization of smartphones and wider adoption of tablets. The company is gaining share in markets such as routers and superfast 4G networks, where it has won billion-dollar contracts with Verizon Wireless (NYSE: VZ) and Sprint Nextel (NYSE: S). Alcatel-Lucent's share of routers sold to carriers grew from 12 percent in 2008 to 16 percent in 2010, and in the fourth quarter it passed Juniper Networks (NASDAQ: JNPR) to become the No. 2 player after Cisco Systems (NASDAQ: CSCO), according to research firm Infonetics. Though the U.S. is ahead of the rest of the world for next-generation LTE networks, which will deliver faster connections necessary for playing games or watching videos on a mobile device, European operators will also start investing more heavily in the technology towards the end of 2011. Alcatel-Lucent is well-positioned in LTE with some of the biggest contracts in the world.

The company is seeking to shed slower-growing units to focus on more promising wireless technologies. Last year, Alcatel-Lucent sold its vacuum technology unit for 200 million euros, after earlier divesting a stake in aerospace firm Thales SA. According to media reports, Alcatel-Lucent is also considering a sale of the enterprise assets, which may fetch about 1.5 billion euros ($2.2 billion). 

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire