Alcatel-Lucent Reports Lower Q1 Revenues, Operating Loss; Shares Rallying

Alcatel-Lucent reported preliminary Q1 results today with an operating loss of €260 million ($353m), as revenues fell 8% to €3.9b, missing analysts' consensus estimate of €4.05b. Half of its loss came from "unusual items," but it does have a one-time €780m gain from the sale of assets. The company cited weakness in traditional wireless and core networks segments. It did not provide net income guidance. Its book-to-bill ratio was 1.3 at the end of Q1. Shares of Alcatel-Lucent trading in Paris lost more than 3% in early trading, but have since rallied back, last trading up 12 cents (+1.29%) to €9.42. MarketWatch reports ABN Amro analysts told clients: "The weak profitability should be sorted out through the cost reductions, and even if the first quarter was clearly disappointing, the revenue miss wasn't that significant." Goldman says its book-to-bill ratio suggests further sales declines are "highly unlikely." Alcatel-Lucent's listing on the NYSE lost 0.48% to $12.57 yesterday. It reports full quarterly earnings May 11.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Alcatel-Lucent Snags $6 Billion Hardware Contract With Verizon • Lucatel Revenues In 'Free Fall' - Cramer Called It • Microsoft Gets Boost in Alcatel Patent Battle
Stocks/ETFs to watch: Alcatel-Lucent (ALU). Competitors: Cisco (CSCO), Ericsson (ERIC), Nokia (NOK), Nortel (NT), Siemens (SI). ETFs: Broadband HOLDRS (BDH), iShares Goldman Sachs Networking (IGN)
Conference call transcripts: Alcatel-Lucent Q4'06

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