Alcatel-Lucent Q4 In Line, But Q1 Guidance Disappoints

Alcatel-Lucent (ALU) Friday morning announced fourth quarter revenue of 5.23 billion euros, beating the Street consensus of 4.94 billion. Adjusted earnings before income taxes of 303 million euros was also ahead of the Street at 246 million.

But the guidance from the company disappointed. The company said it expects a loss at the adjusted operating income level in the first quarter due to “seasonality.” Alcatel-Lucent says it historically sees a 20%-25% sequential revenue drop in the quarter. CEO Patricia Russo said in a statement that “the macroeconomic environment has created uncertainty in our markets in the last few months.” She says the company sees the 2008 global telecom equipment and services market flat to up slightly at constant dollar/euro exchange rates, and slightly down at the current rate.

Nomura analyst Andrew Beswick observes in a research note that a 20%-25% drop in revenues for the quarter is in line with the consensus, but that the expected loss for the quarter is disappointing, with the consensus calling for a profit of 112 million euros.

The company sees adjusted operating margin for the year in the low-to-mid single digit range. Beswick notes that the low margin forecast for the full year compares to Street expectations of 5.4% margins.

Alcatel-Lucent also said that due to the uncertain market outlook, it will suspend its dividend.

Friday, ALU shares are down 25 cents, or 4%, to $6.00.