Weak economic outlook forced the company to write down the value of assets by $5.1 billion
Telecoms equipment company Alcatel-Lucent has reported a net loss of E3.89 billion ($5 billion) for the fourth quarter 2008 against E2.58 billion ($3.32 billion) in the same period last year, as the weak economic outlook forced the company to write down the value of assets by E3.91 billion ($5.1 billion). Revenue fell 5.3% to E4.95 billion ($6.4 billion).
Operating income grew 92% to E297m ($382.7m). The company said carrier revenue declined 11.8% to E3.3 billion ($4.3 billion), enterprise revenue fell 0.4% to E433m ($558m), and services revenue increased 6.4% to E1,086m ($1,399m). Revenue from others contributed E140m ($180.4m).
For fiscal 2008 the company reported a net loss of E1.59 billion ($2.05 billion) compared to a loss of E443m ($570.8m) a year ago, on revenue down 4.5% at E16.98 billion ($21.88 billion).
Ben Verwaayen, CEO of Alcatel-Lucent, said: I am encouraged by our operating performance, measured by our ability to achieve our top-line, operating margin, and cash flow targets. The asset impairment charge that severely impacted our bottom line was made necessary by the drastic deterioration of the global economic outlook during the fourth quarter as well our decision to shift to a more focused portfolio.
The company has been struggling amid spending cuts by its customers including Sprint Nextel as well as price competition from Ericsson and Huawei Technologies. It also struggled to integrate different product lines in the wireless business.
It aims to cut costs by E750m ($966.5m) annually by the end of 2009. In December it announced a plan to reduce the number of managers by around 1,000 and the number of contractors by around 5,000.
Alcatel-Lucent said it is aiming for a gross margin in the mid-30s and an operating margin in the mid-single digits in 2010. It expects to post an adjusted operating profit in 2010.
