Alcatel-Lucent posts profit, gets VZW, Chinese operator contracts

Armed with new contracts from Verizon Wireless and three Chinese operators, Acatel-Lucent reported third-quarter profits and reiterated its fourth-quarter outlook for nominal profitability this year. CEO Ben Verwaayen said he is pleased with the progress the company has made in its “transformation journey” since the company’s merger in 2006. The quarterly profit is only the third since the two companies combined and its first in the third quarter, which is traditionally weaker.
The $4 billion, four-year contract with Verizon Wireless is for the operator’s existing CDMA network and its new LTE network, as well as for IP, optical and microwave backhaul and transport and professional and network integration services. Alcatel-Lucent has been touting its High Leverage Network as a way for operators with multiple networks to reduce the number of networks they manage, leveraging Acatel-Lucent’s wireline, optical and wireless assets.
Alcatel-Lucent also said China Mobile, China Telecom and China Unicom plan to sign framework agreements with the telecom equipment manufacturer that total $1.167 billion. The deal with China Mobile covers GSM and TD-SCDMA wireless solutions, transmission equipment, IP routers and IP Multimedia Subsystem platforms and professional services.
China Telecom’s agreement covers CDMA, fiber- and DSL-based access platforms, IP routers, transmission equipment and applications, while the Unicom deal covers W-CDMA, GSM and femtocell solutions, fiber-based access platforms, IP routers, transmission equipment, managed services and solutions to converge telecom, Internet, TV broadcasting networks and 3G applications.
Q3 financials
Third-quarter revenue totaled $5.79 billion, up 10.5% year over year and 6.8% from the previous quarter, driven by double-digit rate growth in North America, and growth in India, Russia and China. The company’s networks business and its services business both saw single-digit increases in revenue, from IP and wireless sales in networks and from a strong performance in managed and outsourcing solutions on the services side of the business. Revenues in the wireless networks division were up 24%.
The company reported a net income of more than $35 million due to a one-time tax gain as a result of its 2006 merger. Gross profits were up 11.8% from a year ago.