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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Steve Rolfe who wrote (862)	9/9/1999 1:13:00 PM
From: Steve Fancy	Respond to of 3891

Alcatel Says Full-Year Profit to Rise 20% on High-Speed Connection Growth By Daniel Tilles Thu, 09 Sep 1999, 9:51am EDT Alcatel Says Full-Year Profit to Rise 20 Percent (Update2) (Rewrites from 1st paragraph. Updates share price from 3rd.) Paris, Sept. 9 (Bloomberg) -- Alcatel SA, Europe's second- biggest telecommunications equipment maker, said full-year profit will rise 20 percent, fueled by soaring business demand for high- speed communications. Profit from operations should rise to 1.2 billion euros ($1.3 billion) from 1.0 billion euros in 1998. The forecast comes after research costs to develop faster connections for clients helped cut first-half profit 11 percent to 311 million euros from 351 million. Investors have been wary of Alcatel stock since the company warned a year ago that 1998 profit wouldn't meet forecasts. Then, Alcatel's stock plunged 38 percent in a day. Today the shares rose as much as 5.7 percent. ''We were getting used to hearing profit warnings,'' said Pierre-Romain Gorot, fund manager at Jean-Pierre Pinatton, which manages $700 million. ''Now they're saying telecom profit's going to rise. The market loves it.'' Alcatel shares rose as much as 7.8 euros to 144.8 euros. In the last year, the stock is down 8.7 percent, while the benchmark CAC 40 Index has risen 25 percent. The rise in full-year profit will be driven by an expected 33 percent gain to about 800 million euros in the company's telecommunications operation, which comprises its Networking, Internet & Optics and Enterprise & Consumer units, said Jean- Pierre Halbron, senior executive vice president. The company spent 25 percent more, or 200 million euros, on research and development during the first six months of 1999 than in last year's first half. Most of the money went to ADSL, or asymmetric digital subscriber lines, the Internet and other data- sending functions, said Halbron. The pay-back came as first-half shipments of ADSL equipment, which permits high-speed Internet access over regular phone lines, were four times greater than all of last year, Alcatel said earlier this week. Doubling The business is expected to double every year for up to the next four or five years, ''depending on what happens in Europe and Asia-Pacific,'' said Krish Prabhu, chief operating officer for Alcatel Telecom and chief executive of Alcatel U.S.A. ''The credibility of the company will go up a little,'' said Eric Burkel, an analyst at Handelsbanken Markets in Paris, who has a ''strong buy'' on the shares. He nonetheless warned Alcatel was not entirely out of the woods. ''Operationally they still have some weakness across the board, including Internet and Optics.'' First-half net income fell to 223 million euros, or 1.2 euros per share, from 2.32 billion euros, or 13.45 euros per share, in the year-ago period, the company said. The 1998 net figure included an exceptional gain of 2.13 billion euros. First-half sales rose to 10.1 billion euros from 9.4 billion euros.