(UPDATE) France's Alcatel Reorganizes Operations In Wake Of Profit Warning
Dow Jones Online News, Wednesday, November 04, 1998 at 09:18
PARIS -(Dow Jones)- France's Alcatel SA Wednesday announced a
reorganization of its telecommunications activities into three groups in
the wake of a recent profit warning and financial-market turmoil.
Alcatel's (ALA) telecom activities will now be set under: networking,
for switching and mobile infrastructure and for mobile services and
network services; access and transport, for transmission, access,
submarine networks and space activities, and a focus on Internet
technology; and enterprise and consumer, for the private networks and
consumer market, comprising voice and data enterprise networks, GSM and
Internet terminals.
Chief Executive Serge Tchuruk described the move as "an important
step towards better customer service and meeting shareholder
expectations."
Alcatel continues to be under a cloud after it surprised shareholders
with a profit warning after reporting poor first-half results Sept. 17.
The shares fell 38% on the Paris stock market that day. The company had
said its 1998 operating profit would fall about 1.5 billion francs short
of estimates because of canceled equipment orders from big telephone
operators and a deepening of the Asian and Russian economic crises.
Alcatel and other equipment makers must face up to a more fundamental
problem: The big, incumbent phone operators are cutting back or delaying
infrastructure investments in the face of growing competition at home
and uncertainty in Asian and Russian markets.
The company was hit particularly hard by canceled orders from
Deutsche Telekom AG. The German giant has deferred investing in certain
"local access" infrastructure because it is currently forced by
regulators to lease that portion of its network to rivals at low cost.
Alcatel, France's once-struggling trains-to-telecommunications
conglomerate, has been trying to reinvent itself as a high-tech company.
It sold off loads of businesses and is expanding its satellite
operations. The company recently purchased Texas-based telecom-equipment
firm DSC Communications Corp. for about $4.4 billion in stock.
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