Alcatel-Lucent warns economy will ding 2012 results

Summary:Alcatel-Lucent's revenue and profit margins will fall short of expectations amid a "difficult macro-economic environment.

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.

alulogo

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.

Topics: Networking, Hardware, Telcos

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.