PARIS—Alcatel SA reported second-quarter net profits of $228.7 million, an 8-percent decline from last year’s $249.4 million. The profits came from sales of $4.3 billion, a 7.6-percent increase from last year’s revenues of $4 billion.
“While preparing for the merger with Lucent Technologies Inc. and the Thales transaction, Alcatel achieved good revenue growth in the second quarter,” stated Serge Tchuruk, chairman and chief executive officer of Alcatel.
Though the company’s margins in its wireless network equipment are deteriorating, Alcatel said it was gaining ground in China with significant strength in wireless.
“With the industry consolidation gaining momentum, the wireless market environment becomes even more competitive as some players are aggressively trying to reposition themselves,” said Tchuruk. “In the context, we remained deliberately selective in addressing contract opportunities involving mature technologies. At the same time, we continued to invest in key future wireless technologies and applications to develop a leading position in next generation networks. The forthcoming Lucent merger will bring added scale into related R&D programs.”
Alcatel’s acquisition of Lucent is set to close by the end of the year, as both European and U.S. antitrust authorities have given the deal their approvals. The company said it still expects to achieve $1.779 billion in cost synergies once its finances are combined with Lucent’s.
Looking forward, Alcatel said it expects mid-single-digit range growth in the carrier markets during the third quarter as its operating margin remains steady.
Wall Street didn’t seem fazed by Alcatel’s earnings news as the company’s stock traded down just 3 cents at $11.03 per share during early afternoon trading on the New York Stock Exchange.
