Alcatel ups 2002 forecasts
Thursday, January 31, 2002
Telecoms equipment giant Alcatel plunged into the red in 2001 for the second time in its history but its shares surged after the group unveiled a fall in debt and forecast a brighter 2002.
Alcatel, whose competitors include Ericsson and Nortel Networks, reported a 20 percent year-on-year drop in fourth quarter sales to 6.77 billion euros ($5.8-billion U.S.), above analyst forecasts but dragging it to a 368 million euro operating loss versus an 832 million profit a year earlier.
Alcatel's miserable bottom line echoes woes across the industry, as equipment makers bear the brunt of a cash crisis among carriers, but the company sent a more positive signal than many as a restructuring swept the cobwebs off its balance sheet.
CEO Serge Tchuruk told a news conference that while the current industry slowdown would continue to bite in the first quarter, knocking sales down 30 per cent from the fourth quarter, he expected business to pick up from the second quarter.
"We expect 2002 to remain challenging. The first quarter will be weak with market softness compounding the usual seasonal effect (but) income from operations should be essentially unchanged sequentially by virtue of reduced costs and the non recurrence of exceptional charges," he said.
"Even if markets remain soft, from the second quarter we see sequential growth in quarterly sales and operating income with full-year income from operations turning positive," he said.
The company also reconfirmed a prior goal to return to profit at the operating level in 2002 following a drastic restructuring to bring down its breakeven sales level.
"The results are predictably bad, but Alcatel's overall situation looks substantially better than people had thought and the net debt figure is much better than expected," said portfolio manager Paul Casson at Scottish Value Management.
"Alcatel has made promises on restructuring and it is delivering on them. It looks as if it may have turned a corner."
Equipment makers have been hit hard by the cash crisis among telecoms operators, whose heavy investment in external growth and new technology in recent years has left them with debt mountains and little to spend on new infrastructure. |
