Revenue dropped 4.1% to €3.93B, below forecasts of €4.18B.
Adjusted operating profit €307M vs €115M, boosted by higher gross margins and cuts in fixed costs.
Operating margin +5 percentage points to 7.8%, an improvement that the company expects to continue.
Alcatel said it is on track to reach its 2015 targets of becoming cash-flow positive and sustainably profitable.
Alcatel is in negotiations to sell an 85% holding in its enterprise phone business to existing partner China Huaxin after the investment company made a binding offer that gives the business an enterprise value of €268M ($362M).
One question might be whether American authorities will approve the sale of the unit, which makes phone systems and other equipment for businesses, given the security concerns that the U.S. has over Chinese telecom gear.
The deal is part of Alcatel's strategy to sell at least €1B in assets as it refocuses on its most profitable businesses.
Alcatel won't pay a dividend for 2013. (PR)