Alcatel-Lucent, S.A.( ALU ) reported a net
loss from continuing operations of $0.20 (€ 0.16) per ADS in the
first quarter of 2013, worse than the Zacks Consensus Estimate of a
loss of $0.10. In the prior-year quarter, Alcatel had reported
earnings per ADS of $0.13. Earnings in the reported quarter include
an after-tax impact from purchase price allocation entries.
However, excluding the negative impact of the purchase price
allocation entries, loss per ADS came in at $0.19 compared with
earnings of $0.15 per ADS in the prior-year quarter.
In the first quarter of 2012, Alcatel posted revenues of €3.2
billion ($4.1 billion), up 0.6% year over year but down 21.2%
sequentially. The decline was attributable to stagnant orders.
Further, on a geographical basis, the company witnessed declines in
Europe that were partially offset by growth in Asia Pacific.
Geographically, North America posted a 15.1% growth year over
year. However, Alcatel witnessed mixed trends in Asia Pacific,
which resulted in a low single-digit decline of 5.8% year over
year. Further, strong performance in Japan and financial stability
in China were partially offset by continued low volume of activity
in the Asia pacific region. Further, cautious spending in Europe
resulted in a decline of 10.1% in revenues from the region.
However, revenues from the Rest of World were down 13.3% as
continued traction in Brazil was more than offset by poor results
in Central and Latin America, the Middle East and Africa.
Revenues for the Network and Platforms segment
increased 4.2% to €2.7 billion ($3.6 billion) but decreased 21.2%
sequentially. Most of the sub-segments reported a year-over-year
increase in revenues.
Revenues in the IP division increased 6.3% year over year,
driven by continuous progression in the American region and
breakthroughs in Japan's NTT, which resulted in revenue growth in
the Asia Pacific region in the quarter.
The Wireless division reported a 4.9% increase from the year-ago
level. In 2012, the Wireline business reported its first full year
of growth since the merger of Alcatel and Lucent, primarily driven
by fiber roll-outs for nationwide broadband initiatives. In third
quarter also the growth drivers continued to improve the company's
results. The company signed a number of LTE contracts in the last
quarter. However, growth in LTE and RFS, which includes cable,
antenna and tower systems, was partially offset by an overall
decline in 2G/3G technologies.
Revenue in the Fixed Networks grew 8.6% year over year. However,
the Optics division reported a decline of 15.6% year over year.
This decline was partially offset by improved results from the WDM
(Wavelength-Division Multiplexing) technology segment. Revenues
from the Platforms division experienced a marginal increase of 8.6%
year over year.
Revenues at the Services segment grew 33.2% year over year to
€2.9 billion ($3.8 billion) but declined 9.8% sequentially. During
the quarter, the division's Network applications along with its
Strategic Industries Services reported strong revenues. The
year-over-year growth was primarily driven by Network Build and
Implementation (NBI) as well as Integration Services.
Revenues in the Focused Business declined 22%
year over year and 19.2% sequentially to €302 million ($399
million) in the first quarter of 2013. At constant currency
exchange rates, revenues at the Enterprise business segment
declined 23% year over year and 18.9% sequentially. Both the sub
segments, Enterprise and Submarine reported a decrease.
Revenues from the Managed Services segment
decreased 4.2% to €2 billion ($2.6 billion). However, Alcatel
entered into 5 new long- term contracts during the quarter. This is
expected to improve the company's results in the coming
Gross margin for the first quarter declined approximately 80
basis points (bps) to 29.4% year over year while it reduced 100 bps
from 30.4% in the previous quarter. The year-over-year decline was
attributable to a lower mix, and lower volumes.
Operating expenses during the quarter decreased 5% year over
year (constant currency) attributable to the cost reduction plan
implemented by Alcatel, primarily focusing on SG&A expenses,
which declined 11.3% year over year on constant currency. On a
sequential basis, operating expenses increased marginally by 0.5%
(constant currency), driven by a 2.3% sequential increase in
Balance Sheet & Cash Flows
Exiting the quarter, Alcatel had a net debt of €358 million
($458 million) versus €147 million ($193.8 million) of net cash at
year-2012. The sequential decrease in net cash of €505 million
($667 million) primarily reflects negative operating cash flow of
€144 million ($190.2 million). The negative cash flow is primarily
attributable to, restructuring costs of €100 million, capital
expenditure of €117 million and contribution to pension plans and
negative working capital requirements of €146 million ($192.8
Presently, Alcatel-Lucent has a Zacks Rank #4 (Sell). A few
other companies operating in the same industry who are worth
considering at the moment are Plantronics, Inc. (
PLT ) with a Zacks
Rank #1 (Strong Buy), while, NICE Systems Ltd . (
NICE ), and
ClearOne, Inc. ( CLRO ) have a Zacks
Rank #2 (Buy) .ALCATEL ADS (ALU): Free Stock Analysis ReportCLEARONE INC (CLRO): Free Stock Analysis ReportNICE SYSTEM-ADR (NICE): Free Stock Analysis
ReportPLANTRONICS INC (PLT): Free Stock Analysis
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