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

To: zbyslaw owczarczyk who wrote (3232)	4/26/2001 9:10:17 AM
From: elmatador	Respond to of 3891

Alcatel cuts growth forecast By Raphael Minder in Paris Published: April 26 2001 07:20GMT \| Last Updated: April 26 2001 11:46GMT Alcatel, the French telecommunications equipment maker, on Thursday cut its 2001 growth forecast and said it would outsource production of handsets to Flextronics, the Singapore-based contract manufacturer, to counter weaker demand for mobile phones. Alcatel said it expected revenues from its telecoms business to rise between 5 and 15 per cent this year, down from a previous forecast of 20 per cent growth. Telecoms sales rose 24 percent in the first quarter. Like other handset makers, Alcatel has been hit by a slowdown in the mobile phone sector which has led to a build-up in inventories. To counter this, Alcatel said it would move production to a single plant in Laval and outsource it to Flextronics. The other existing handset factory, in Illkirch, will be converted into an optical components production site, ensuring that the shake-up will not lead to job cuts. Alcatel had previously announced a two-week halt in production to help ease the problem of excess inventories of handsets. Separately on Thursday, Alcatel said it would take a series of cost-cutting steps, including reducing travel budgets, which should save about $1bn. The group's net profit fell 19 per cent in the first quarter to E210m ($188m). Total revenues rose 21 per cent to E7.4bn. Serge Tchuruk, chief executive, said that "poor visibility dictates that we sound a cautious note about the industry's short-term prospects. The unfavourable US economic context is continuing". "In Europe, even while demand for broadband access and carrier networking should remain robust, we are beginning to see some localized pockets of slowing growth. Nonetheless, Alcatel's momentum remains strong. We feel confident that Alcatel will emerge from the present industry downturn with a stronger market share," he added. Mr Tchuruk also confirmed that Alcatel had put in an offer for the optical fibre business of US-based Lucent, without giving details. "We have made an initial offer and we will see how things evolve," he said. The company downplayed concerns that it would be hit by the ongoing problems of 360 Networks, the Canadian telecoms group with which it has a $1.5bn contract. Alcatel said the contract was irrevocable, even if it needed to take a provision because the final payment may be affected by a fall in the value of 360 Networks' share price. Alcatel Optronics, the group's optical components unit, doubled its operating profit in the first quarter to E30.4m. Sales also doubled and the unit sees full-year sales growth of 50 per cent and an operating margin of 20 percent. Despite the downward revision of its growth estimates, shares in Alcatel initially rose 3 per cent on Thursday morning, before trimming those gains to trade 1.5 per cent higher at E32.76.