Alcatel, Ericsson Comfortable With 1999 Earnings Targets
Dow Jones Online News, Jan 7, 2000 10:19 hrs
PARIS -(Dow Jones)- Following a profit warning by U.S. rival Lucent Technologies Inc., telecommunications-equipment suppliers Alcatel SA and Telefon AB L.M. Ericsson both announced Friday that they expect to meet their 1999 earnings target.
"We are very comfortable we will meet our expectation," said an Alcatel spokesman.
The mean estimate of eight analysts surveyed by First Call/Thomson Financial is for earnings of about 29 cents per American depositary share in the fourth quarter and 78 cents per share in the full year.
In November, France's Alcatel Chairman Serge Tchuruk said he maintains his full-year outlook for the company, including fourth-quarter operating profit, at about the same level as last year's, and full-year 1999 operating profit at 1.2 billion euros ($1.24 billion), compared with one billion euros in 1998.
For the nine months ended Sept. 30, Alcatel (ALA) reported net profit of 305 million euros, compared with 2.31 billion euros in the same period last year. Revenue climbed 8.1% to 15.35 billion euros. Operating profit for the nine-month period rose 51% to 607 million euros.
Alcatel will release its 1999 earnings Feb. 3.
Separately, an Ericsson (ERICY) spokeswoman said the company is sticking to an earlier pretax profit target for 1999. On Oct. 22, Sweden's Ericsson said it aimed to make a pretax profit of between 15 billion Swedish kroner ($1.79 billion) and 16 billion kroner in 1999, compared with 18.21 billion kroner in 1998.
The mean estimate of analysts surveyed by First Call/Thomson Financial is for earnings of about 31 cents per American depositary receipt in the fourth quarter and 67 cents per ADR in the full year.
Traders and analysts in Stockholm said that Lucent's problems were company specific and not related to the sector, indicating that Ericsson could benefit from Lucent's woes.
"There have been no signs of a slowdown in demand in the telecoms sector, but the reaction in the (Ericsson) share is really inevitable, especially with the high valuations we have at the moment," said one analyst who said he expects Ericsson to climb to new record levels during the first quarter.
Ericsson releases its full-year earnings Jan. 28.
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