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

To: Steve Rolfe who wrote (975)	11/10/1999 12:12:00 PM
From: Steve Fancy	Respond to of 3891

Alcatel Says 3rd-Quarter Earnings, Revenue Met Company Expectations Dow Jones Online News, Wednesday, November 10, 1999 at 09:11 PARIS -(Dow Jones)- French telecommunications-equipment supplier Alcatel SA Wednesday reported third-quarter earnings that met company and market projections as turnarounds in the networking, enterprise and consumer and telecom components divisions helped offset a decline in the energy cables business. Alcatel (ALA) reported a net profit of 83 million euros ($86.4 million) for the third quarter of 1999, compared with a loss of nine million euros in the same period last year. Operating profit in the third quarter was 296 million euros, a sixfold increase from 50 million euros last year. The company said results were lifted by growth in its submarine operations. Third-quarter revenue totaled 5.26 billion euros ($5.47 billion), up 9.4% from 4.8 billion euros in the year-ago quarter. Alcatel said Wednesday its third-quarter earnings were in line with the company's expectations. "Our targets have been met to turn around underperforming businesses, with our enterprise and consumer segment as well as our cellular infrastructure activity moving into the black this past quarter," Chief Executive Serge Tchuruk said. Analysts agreed that Alcatel's results met market forecasts. "The figures were rather reassuring, largely in line with our expectations," said Jean-Claude Gironde, chief trader at broking house Aurel Leven. Shares of Alcatel were down slightly in afternoon trading in Paris on what Gironde termed profit-taking following an early runup in the stock's price Wednesday. He also blamed Alcatel's slide on overall market weakness. The group's networking division reported a third-quarter operating profit of 88 million euros, a sharp turnaround from a loss of 94 million euros in the year-ago period. The sector generated revenue of 1.55 billion euros, up 9.9% from 1.41 billion euros last year. Alcatel's Internet and optics division posted a 27% increase in operating profit of 108 million euros, compared with 85 million euros in the same period last year. Revenue jumped 33% to 1.34 billion euros from 1.01 billion euros. Operating profit from Alcatel's enterprise and consumer operations totaled seven million euros in the third quarter, compared with a year-ago loss of 22 million euros. Revenue rose 8.2% to 840 million euros from 776 million euros. The telecom components business posted third-quarter operating profit of 91 million euros, compared with a loss of 58 million euros last year. The division generated revenue of 807 million euros, up 7.2% from 753 million euros. Alcatel said its energy cable division continues to operate in a "difficult market." The division's third-quarter operating profit was 22 million euros, down 12% from 25 million euros in the same period last year. Revenue declined by 1.8% to 840 million euros from 855 million euros. The company said good performance in the U.S. couldn't compensate for slower demand for equipment cables in Europe. As a result, Alcatel has decided to implement a "strong" cost-cutting program within the sector. For the nine months ended Sept. 30, Alcatel 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 from 14.2 billion euros a year ago. Operating profit for the nine-month period was 607 million euros, compared with 401 million euros in the same period last year. Alcatel's Tchuruk said Wednesday he maintains his full-year outlook for Alcatel, including fourth-quarter operating profit at about the same level as last year's and full-year 1999 operating profit of 1.2 billion euros, compared with one billion euros in 1998. Tchuruk said Alcatel's disposal of its stake in nuclear-engineering company Framatome SA will generate a one-time, after-tax net profit of about 300 million euros, which will appear in the group's fourth-quarter results. Alcatel will publish its fourth-quarter and full-year 1999 results on Feb. 3, 2000. Tchuruk said he hopes to conclude the disposal of Alcatel's battery division soon and is studying the strategic options for the energy cable business, where profit margins have been under pressure all year. Meanwhile, Alcatel's Tchuruk said the group's growing number of asynchronous digital subscriber lines means the ADSL division should move into the black next year, while third-quarter results suggest the group's restructuring is almost complete and is starting to pay off. He also said that the ADSL business will be profitable in 2000, before being "highly profitable" in subsequent years. ADSL sales, which will amount to some 1.3 million lines by the end of the year, should generate revenue of about 400 million euros in 1999. In 2000, Alcatel expects ADSL sales to exceed two million lines. Separately, Tchuruk said Wednesday that Alcatel's board didn't hold any discussions about buying Canada's Newbridge Networks Corp. (NN) at its board meeting Tuesday. He also said that Alcatel isn't planning any "major acquisition" in the near future, although it is tracking potential opportunities. In a telephone briefing with analysts, Tchuruk said he wouldn't comment further on speculation that Alcatel is on the verge of making an offer for Newbridge, whose shares climbed on the Toronto Stock Exchange Tuesday on talk of an imminent deal. Dan Dorfman, a Wall Street stock pundit, wrote Tuesday that Alcatel was interested in acquiring Newbridge for about $24 a share. Analysts said the takeover talk was understandable after Newbridge recently warned investors for the sixth time in nine quarters that earnings would fall short of expectations. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved.