Alcatel shares slide after profit warning
Alcatel-Lucent provided further evidence of the travails in the telecoms equipment sector as it disclosed a €40m operating loss in the second quarter of 2012 and said it was abandoning its full-year profit targets.
The French company said second-quarter sales had recovered after a slump in the first three months of the year, rising from €3.2bn to €3.5bn, but it had failed to translate this rise into higher profits because of its “business mix”.
Shares in the group fell more than 14 per cent in early Paris trading.
Alcatel provides equipment and services to global telecoms operators, which are cutting budgets because of declining sales – including in Europe, which is suffering because of the eurozone crisis. Alcatel and its rivals, Ericsson and Nokia Siemens Networks, are also having to cut prices because of competition from Asian rivals such as Huawei Technologies and ZTE.
Alcatel said it would not now deliver on a promise to beat last year’s 3.9 per cent adjusted operating margin.
Analysts had feared that a profit warning was coming from the company after Ben Verwaayen, chief executive, warned of a “slow start to 2012 in a volatile environment” in April. Alcatel is doing well in wireless networks in the US but has warned of “high market uncertainties” in Europe.
Ericsson has also reported tumbling margins and revenues, while Nokia Siemens Networks is in the middle of a corporate restructuring that will see the loss of 17,000 jobs worldwide.
Mr Verwaayen has attempted to make Alcatel into a “normal company” following years of problems since the poorly executed merger of Alcatel and Lucent of the US in 2006, but is struggling because of the structural problems in the industry.
Alcatel shares were down 14.73 per cent at €0.97 in mid-morning trading.