Shares of wireless infrastructure giant Alcatel-Lucent are trading higher on the heels of the company’s fourth-quarter earnings report. Revenue declined, but net income rose as the company reported fixed cost savings of $34 million for the quarter.
Fourth-quarter revenue was $4.1 billion, and net income was $307 million, more than double the year-ago amount. Full-year revenue was $14.8 billion, and the company lost $134 million last year.
Alcatel-Lucent, formed by the merger of Alcatel and Lucent, has been cutting costs and working to transform into an IP networking company through its Shift Plan, initiated by CEO Michael Combes. Combes said that the combination of costs cuts and a shift in product focus should result in positive free cash flow this year.
“We believe Alcatel-Lucent can achieve its goal for positive free cash flow in 2015,” said analyst Simon Leopold of Raymond James Equity Research. “We are optimistic that routing sales will grow nicely, taking share. The wild card might be the submarine contribution to IP Transport that has exhibited sharp cycles.”
Core networking products represented half of Alcatel-Lucent’s Q4 revenue. Within the core networking segment, IP routing and IP transport each represented about 36% of total revenue, while IP platforms represented 27%.
For all of 2014, Alcatel-Lucent said that revenue from North American customers was down 6%, revenue from Europe was down 10%, revenue from Asia Pacific customers was up 15% and revenue from the rest of the world was down 4%. North America is by far the company’s biggest market, accounting for 43.5% of 2014 revenue.
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