Alcatel-Lucent has warned that it expects revenue for the first quarter to fall 12% to 3.9bn euros ($5.3bn), largely driven by lower wireless sales especially in 2G in some emerging markets.
While the company said the decline was only 8% at constant exchange rates, it said it would lead to an operating loss of 260m euros ($353m), half of which it attributed to unusual significant items. The loss is similar to that recorded by the two companies a year ago.
It said the loss resulted from lower revenue and investments it was making in WCDMA and in the converged core portfolio. It said these were important strategic investments that will pay off in the future. But until the economies of scale that lay behind the merger are realized, the new company is clearly having a difficult time competing with established giants such as Ericsson in emerging markets.
CEO Patricia Russo claimed that four months after completing the merger, good progress has been made in terms of integration with technology choices finalized and the combined company’s portfolio communicated to customers. She said net headcount reductions were 1,900 during the quarter, 15% of the three-year target of 12,500.
Russo said the company continued to gain sales momentum during the quarter and the book-to-bill ratio stood at 1.3x.