Alcatel Posts Profit Decline - InformationWeek

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Alcatel Posts Profit Decline

Net profit dropped 16%, while sales rose 18%.

Alcatel posted declining earnings Thursday amid its pending merger with Lucent Technologies, which also reported declining earnings earlier in the week. The two reports indicated that the tough competitive landscape among telecommunications infrastructure suppliers is intensifying across-the-board in the sector.

"Thanks to the strong and complementary geographical and technological attributes of both companies," said Alcatel's chairman and CEO Serge Tchuruk in a statement, "our pending merger with Lucent Technologies should provide enhanced earnings opportunities for the combined company." Alcatel has agreed to merge with Lucent in a $13.4 billion deal that will leave the Paris-based firm as the dominant entity.

Alcatel said its net profit dropped 16 percent to $129 million (104 Euros), while sales provided a brighter side to the financial report rising 18 percent to 3.07 billion euros.

"2G and 3G pricing is tough at the moment," Mike Quigley, Alcatel's COO, said at a news conference, reflecting the intense competition underway throughout the mobile infrastructure business.

Earlier this week, when Lucent reported its second quarter of declining sales, chief executive officer Patricia Russo said a combined Lucent-Alcatel company would have a strong R & D capability at a time when innovation in the industry is particularly important.

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