Alcatel Maintains Optimism
RELATED SYMBOLS: (ALA)(LU)(ERICY)(MONI)
New York, Jul 26, 2001 (123Jump via COMTEX) -- As are most of its competitors,
French telecom-equipment supplier Alcatel (ALA) is going through a harsh
financial period and a wide-scale restructuring.
Some 14,000 full-time employees will leave the company by year-end. This number
excludes people who may lose their jobs under the company's plan to outsource
manufacturing for the majority of its factories, as well as the 6,000 employees
who work for its enterprise-distribution unit, which is up for sale.
These reductions are aimed at helping the company recover from this year's
losses and retain annual revenues to levels of last year. Rival companies
Marconi (MONI), Lucent (LU) and Ericsson (ERICY) are also cutting jobs to cope
with the industry slump.
Q2 Results
Thursday, Alcatel posted a loss of $2.7 billion for its second quarter - sharply
down from a net profit of $302 million a year ago. Revenue fell 12% to $5.9
billion from $6.9 billion in the second quarter 2000.
The loss had been widely expected after the company warned in May it would take
$2.6 billion in restructuring charges and write down inventory due to
overcapacity in the industry.
On a slightly brighter note, Alcatel posted an operating profit of $120 million
for the quarter, exceeding its May forecast of $88 million. However, these
results are significantly lower compared with its operating profit of $562
million for the respective quarter last year.
Alcatel shares gained 4% to 15.60 in early U.S. trading Thursday amid signs of
relief that the company had not delivered another revision to its financial
outlook.
Although third-quarter revenues are likely to fall short of last year's levels,
Alcatel expects to generate positive income from operations in fiscal 2001,
executives said.
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