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Alcatel-Lucent 2012 revenue dips to $19.5B

The ailing French telecoms equipment maker also confirms CEO Ben Verwaayen has resigned but will stay on until his replacement is found. Its full year revenue drops 5.7 percent to 14.45 billion euros (US$19.58 billion).
Written by Eileen Yu, Senior Contributing Editor

Alcatel-Lucent has confirmed its CEO Ben Verwaayen will step down, as the ailing French telecoms equipment maker announces its fourth-quarter and full fiscal year 2013 results on Thursday.

Revenue for the fourth quarter climbed 13.8 percent over the previous quarter to 4.01 billion euros (US$5.43 billion), but this represented a 1.3 percent drop from the same quarter in 2011. For the year 2012, revenues fell 5.7 percent over last year to 14.45 billion euros (US$19.58 billion), while its gross profit took a bigger dive at 18.9 percent to 4.34 billion euros (US$5.88 billion).

Alcatel-Lucent 2012 results

For the year, the company clocked an adjusted operating loss of 260 million euros, compared to a operating income of 519 million euros in 2011. Its published net loss was 1.37 billion euros (US$1.86 billion).

In terms of geography, North American remained its biggest revenue contributor generating 5.8 billion euros (US$7.86 billion), a 1.5 percent drop from 2011. Asia-Pacific clocked 2.51 billion euros (US$3.4 billion) in revenue, dropping 5 percent over the previous year. Its European business saw the steepest revenue decline of 16.4 percent to 3.8 billion euros (US$5.15 billion).

Revenue from the rest of the world saw the only positive growth, climbing 3.7 percent to 2.33 billion euros. According to Alcatel-Lucent, growth was driven by continuous traction in Brazil, Middle East and Africa, which returned to growth after several quarters of decline. It added that cautious spending persisted in Europe, while mixed trends were seen in Asia-Pacific where Japan saw some traction which was offset by continued low activities in China.

Bright spots came from the company's IP division which revenue spiked 26.4 percent in the fourth quarter year-on-year to clock 574 million euros (US$777.78 million). The wireless division also saw its first upswing of 2.2 percent year-on-year for the quarter after four consecutive quarters of double-digit declines. For the year, however, wireless revenue dropped 35 percent. Alcatel-Lucent attributed this to the transition from 2G/3G to 4G in North America, as well as an overall cautiousness in the rest of the world.

Its overall networks business unit, which also comprises its wireless, optics and IP divisions, saw a 8.6 percent drop in revenue to 8.82 billion euros for the year.

Its enterprise business saw revenues dropped 3.7 percent in the quarter year-on-year to 215 million euros (US$291.33 million). Growth in Asia-Pacific helped boost declines in Europe, and the company scored new wins in emerging countries and the datacenter sector. For the full year, its enterprise business saw revenue dip 7.1 percent to 764 million euros (US$1.04 billion).

Services clocked almost 1.15 billion euros (US$1.56 billion) in revenue, a slight decrease of 0.9 percent from the same quarter a year ago. Alcatel-Lucent said the restructuring of its managed services service led to a slowdown in sales, from a double-digit growth in the first half of 2012 to a single-digit decline in the fourth quarter.

It noted efforts to look for new market opportunities which offer higher value-add, and pointed to its eight-year network managed services contract with India's Reliance Communications worth US$8 billion.

The board recommended no dividends be paid out for the fiscal year.

Alcatel-Lucent said its 2012 results were in line with its guidance and closed with cost savings of almost 650 million euros (US$880.76 million).

Verwaayen said: "Our fourth quarter reflects the early progress of [the company's] Performance Program announced last July [when] we announced clear choices on where we would operate, whow we would operate, and where we would operate. We have seen progress on all these choices, and close 2012 ahead on our cost reduction plans.

"We have addressed half of the previously margin-diluting managed services conrtacts and showed continued and strong growth in IP and next-generation wireless."

Its share climbed over 6 percent following the announcement of its results.

Hunt is on for new CEO

In a separate announcement Thursday, Alcatel-Lucent confirmed its Verwaayen has resigned from his position as CEO. While earlier reports suggested the board had grown impatient with his progress to turn the company around, the official statement announced it was the Verwaayen's decision to step down.

Alcatel-Lucent Board Chairman Philippe Camus said: "Over the last few years, Ben has set a new direction, created one company out of two, and has recently seen through the completion of the stabilization of the company's balance sheet, enabling us to move forward with confidence."

He said Verwaayen will remain as CEO until a new one has been identified, either internally or externally.

Verwaayen said: "Now is an appropriate moment for the board to seek fresh leadership to take the company forward... The combination of our recent refinancing and the implementation of our restructuring plan will put the company on a secure footing for the successor the board will seek to appoint."

Alcatel-Lucent in December had secured US$2.1 billion in financing from Credit Suisse and Goldman Sachs, which Verwaayen then said would be used to extend its existing debt over several years and give the company more room to maneuver in the short-term.

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