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

To: zbyslaw owczarczyk who wrote (1693)	5/4/2000 7:25:00 AM
From: Paul Lee	Respond to of 3891

Alcatel shares fly on record Q1,outlook By Sophie Walker PARIS, May 4 (Reuters) - France's Alcatel posted record first quarter results and bullish outlook on Thursday, sparking a rush for its shares, and also unveiled a project to spin off its cable activities to focus on the booming telecoms sector. At 1055 GMT Alcatel stock stood 6.5 percent higher at 268 euros in hefty turnover, with more than 1.7 million shares changing hands at that time. Analysts and traders welcomed Alcatel's sharp rise in net income to 258 million euros ($230 million), against a loss of 18 million euros in the year-ago period, and noted the jump in telecoms sales. Total revenue rose 42 percent to 6.1 billion euros, with a rise of 47 percent in the four telecoms sectors which include switching and networks, Internet, consumer and components units. Operating profit was 113 million euros against a loss of 154 million euros and diluted EPS was 1.31 euros. ``These are very good results and the growth in telecoms will have a leverage effect on Alcatel's margins,'' said Societe Generale analyst Bernard Malhame, who had a price target of 320 euros on the stock before the results were published. ``Alcatel should hit seven percent operating margin in 2000, not including its acquisition of Newbridge Networks and the IPO of its cable operations which will add another percentage point,'' he added. Alcatel's finance director Jean-Pierre Halbron noted the first-quarter sales did not include its purchase of Canada's Newbridge and said that operation was likely to be concluded in May. He told a conference call Alcatel was expecting full-year operating profit of around two billion euros. ``Sales should rise 30 percent and operating margin, which was around 1.2 billion last year, should rise 60 percent, or around 700 million euros,'' Halbron said. ``Therefore, operating profit will be around 1.9 billion euros this year for the four telecoms sectors... if you add energy cables, we should be at two billion,'' he added. PLANS TO LIST CABLE UNIT Alcatel said it would list its cables and components business on the Paris bourse between now and the end of the year, but would keep some activities, including fibre-optics and submarine, which represent around 3.3 billion euros in sales. The new entity will have sales of around four billion euros, and the resources to pursue an aggressive growth strategy and take advantage of potential sector consolidation, Alcatel said. ``There have been numerous development and acquisitions projects we did not do because they were not core activities,'' Halbron told journalists. ``This way we give (the new company) the liberty to grow and increase speed of development.'' A boom in networking and Internet business fed the surge in Alcatel's sales, driven by the demand for more capacity given the increased use of Internet and mobile phones. Network sales increased by 40 percent and Internet and optics surged 55 percent, with 736,000 ADSL high-speed Internet lines delivered to customers in the U.S. Alcatel forecast delivery of more than four million ADSL lines thus year, beating a previous target of 2.5 million. Lehman Brothers raised its target price for Alcatel to 320 euros on the expectation it would grab 10 percent market share of the global mobile Internet market, after the firm announced on Tuesday a joint venture with Japan's Fujitsu. ``Our objective is to be a worldwide leader... the alliance gives us a gain of nine months over the competition,'' Alcatel Chairman Serge Tchuruk told a conference call on Thursday. Lehman analyst Philippe Schmitt said in his report that Fujitsu would enable Alcatel to participate in the bidding process for mobile phone infrastructure that is accelerating throughout Europe. Malhame at Societe Generale said Alcatel was catching up with industry giant Ericsson. ``(In terms of operating margin) Alcatel is catching up with Ericsson, but there is still some way to go, given that Ericsson's 2000 target was 11.5 percent,'' he said.