Tags: EU | France | Earns | Alcatel | Lucent

Alcatel-Lucent Shares Plunge After Bigger Than Expected Loss

Thursday, 06 May 2010 01:41 PM

Shares in Alcatel-Lucent SA plunged on Wednesday after the telecommunications equipment maker reported a bigger than expected 515 million euros ($665 million) net loss for the first quarter.

The loss was 28 percent wider than the 402 million euro loss booked in the same period last year. Revenue fell 9.8 percent to 3.24 billion euro.

Investors were spooked and sent shares 11.15 percent lower to 2.01 euros in Paris morning trading.

The Paris-based company said a components shortage held back sales, which Chief Executive Ben Verwaayen told reporters is an "industrywide issue."

He said telecoms equipment makers are competing with automakers and consumer electronics firms for some of the more basic parts.

"We were not able to fully satisfy customer demand for our products due to tightening components availability," Verwaayen said.

"This resulted in a weak financial performance this quarter, which does not reflect the overall underlying momentum within the company."

Looking ahead, Alcatel-Lucent said demand for telecommunications equipment and services is recovering, though its supply chain is still struggling with tight capacity.

Verwaayen kept his expectations for the full year unchanged and said he sees a recovery in the North American market.

Alcatel-Lucent has said it aims to reach an adjusted operating margin between 1 and 5 percent this year. The measure excludes charges related to the 2006 trans-Atlantic merger.

The company has struggled for years to justify the merger that created it with the aim of becoming a global telecommunications leader. Losses racked up by the company since then now top 9 billion euros, and the company has warned investors not to expect it to return to the black before 2011.

The company has been slashing costs and cutting its work force as part of a three-year turnaround plan introduced by Verwaayen last year.

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