Alcatel-Lucent warns economy will ding 2012 results

Alcatel-Lucent said that its 2012 results will fall short of its expectations due to a sputtering global economy.

In a statement, Alcatel-Lucent said it will post an operating loss of Euro 40 million with revenue above Euro 3.5 billion. Analysts were expecting Alcatel-Lucent to deliver an operating loss of Euro 38 million on revenue of euro 3.83 million.

Overall, Alcatel-Lucent said it was seeing sequential growth in its divisions and geographies, but the company won't hit its profit margin targets. The company said:

Looking ahead, based on the current order book, Alcatel-Lucent expects the second half of 2012 to be better than the first half, but in light of year-to-date performance and the difficult macro-economic environment, Alcatel-Lucent will not be able to achieve its previously announced adjusted operating margin guidance for the full-year 2012.

The company said that it has cut costs Euro 100 million from a year ago.

Telecom equipment companies have been struggling overall. ZTE, a Chinese equipment vendor, said its profits would fall short. Nokia Siemens Networks has also been struggling.

Morgan Stanley analyst Francois Meunier said Alcatel-Lucent has structural problems. Meunier said in a research note that he was disappointed that Alcatel-Lucent didn't outline its cash position given the debt payments it has coming up in the years ahead. He added:

What concerns us is the potential for further cash burn over the remainder of 2012, and the decreasing prospect of additional asset sales to bolster Alcatel-Lucent liquidity position. We think risk to cash is on the downside, and remain underweight on the stock.