Alcatel-Lucent posts net losses of £768m in second quarter of 2013

Qualcomm to take small stake in mobile infrastructure giant as the two companies announce a collaboration to develop 3G, 4G and Wi-Fi small cell base stations

Alcatel-Lucent posts net losses of £768m in second quarter of 2013

Alcatel and Qualcomm announced a plan today (30 July 2013) to collaborate on the development of 3G, 4G and WiFi small cell base stations networks to improve wireless connectivity in residential and enterprise environments. A-L also revealed its Q2 2013 results today (see below).

A report in today’s Financial Times said that Qualcomm would also take a small stake – below the 5% disclosure threshold – in Alcatel-Lucent. Another report on Bloomberg said today that A-L was looking for “three to five partners” to take a similar stake. A-L has been losing money for some years and recently announced its three-year ‘Shift Plan’ designed to bring it back into profitability.

A-L said wireless network operators and service providers are looking to small cells to cost-effectively meet the rapidly expanding demand for mobile data capacity and network coverage. By working together, Alcatel-Lucent and Qualcomm Technologies intend to accelerate the adoption of small cells and alleviate the impact of mobile data on wireless networks.  

To facilitate this acceleration, the two companies plan to jointly invest in a strategic R&D program to develop the next generation of Alcatel-Lucent lightRadio small cell products featuring Qualcomm Technologies’ FSM9900 family of small cell chipsets. The investment would be shared by Alcatel-Lucent and Qualcomm Technologies.

Q2 2013 Results

Alcatel-Lucent reported revenues of Euro 3.6bn (£3.1bn) for the second quarter of 2013, up 1.9% on a year ago and up 12% on Q1 2013. It posted a net loss of Euro 885m (£768m) for the quarter compared with a loss of Euro 396m (£343m) a year ago and a loss of Euro 353 (£306m) in Q1 2013.

CEO Michel Combes commented: “We are at the beginning of our journey towards 2015 and cash remains a challenge. Looking ahead, our clear focus will be maintaining a strict and disciplined approach to implementing The Shift Plan across all of its industrial, operational and financial dimensions.’

The Shift Plan, announced on 19 June 2013, calls for: a refocusing of A-L’s R&D spending on IP Networking and Ultra-Broadband Access with an increased emphasis on co-development with major customers and partners; Euro 1 billion in targeted reductions in A-L’s fixed cost structure; selective asset sales intended to generate at least Euro 1 billion; and a reprofiling of A-L’s Euro 2 billion debt followed by a future reduction of that debt.

A-L saw falls in revenue in all its key regions except North America where revenue grew by 17.1% year-on-year to Euro 1.6bn (£1.4bn). Europe fell by 7% to Euro 878m (£762m); Asia Pacific dropped by 5.3% to Euro 587m (£509m) and the rest of the world by 12.7% to Euro 510m (£442m).

The divisional breakdown revealed that revenues in Networks and Platforms grew 5.9% year-on-year to Euro 3bn (£2.6bn) with Wireless making up approximately a third of the total at £1bn (down 1.1% yr-on-yr). IP grew by 20.9% to Euro 624m with Fixed Networks the next largest segment – it grew by 3.3% to Euro 468m.

Revenues in the Focused Businesses division fell by 18.3% year-on-year to Euro 272m (£236m), while Managed Services fell by 14.7% to Euro 215m (£186m).

The gross margin was 31.9%, similar to 2012 and improving compared with Q1 2013 as a result of higher volumes and a more favourable product mix. Fixed cost savings accelerated to Euro 120m. A-L said this gave it confidence it would meet its full-year savings target.

Written by Wireless magazine
Wireless magazine

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