Global telecom equipment-maker Alcatel-Lucent announced Wednesday it will cut 4,000 more jobs and target a further $577 million (€400M) in cost savings after posting a worse-than-expected Q3 loss and lowering its full-year revenue forecast. Investors cheered the move, lifting shares as much as 4% in Paris trading. The widely-anticipated measures bring the firm's total job cuts to 16,500 and €1.7B in savings by 2009. Alcatel swung to a quarterly loss of €345M on poor U.S. wireless sales and strong competition. "The conditions in the market are such that the volumes we are seeing are not what had been expected," CEO Patricia Russo said (full earnings call transcript later today). Analysts polled by Dow Jones were expecting a milder €209M. Adjusted operating profit, which discounts restructuring and acquisition costs and other items, was €70M. The company now sees flat revenue for 2007, down from "flat to slightly up"; as recently as June it was still forecasting 5% growth. "We are seeing fairly recently some further signs of softness with respect to spending, again predominantly in North America," Russo told reporters. "What investors were interested in were the benefits from the cost-cutting program and the first fruits were found in the third-quarter results," BNP Paribas analyst Alexander Peterc said. Alcatel is the number-one global provider of ADSL fixed-line equipment for broadband internet, telephony and TV, and number-three for mobile infrastructure. Addressing calls for it to exit the high-speed mobile market, Alcatel said it would not, calling it "strategic."
Commentary: A Comparison of WiMax, 3G and Wi-Fi • Alcatel-Lucent's CEO Needs Bold Plan To Keep Her Job
Stocks to watch: ALU. Competitors: NT, ERIC, SI, CSCO. ETFs: BDH
Earnings call transcript: Alcatel-Lucent Q2 2007
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