Analysts:
"The company's shares trade at about 25 times estimated 2001 earnings,
Lecoq said. ``That's
pretty low,'' Lecoq said.
Ericsson AB, the biggest supplier of wireless
networks, trades at about 40 times estimated
earnings, according to Bloomberg data. Nokia Oyj, the
No. 1 maker of mobile phones, sells shares
at about 37 times and Siemens trades at about 24
times estimated earnings."
quote.bloomberg.com
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Paris, April 26 (Bloomberg) -- Alcatel SA, Europe's fourth- biggest phone
equipment maker, said
first-quarter profit fell 19 percent and cut its
full-year sales forecast because of falling demand for
its mobile phones and network gear.
To stem losses at the handset unit, Alcatel said it
will concentrate European production of mobile
phones at its plant in Laval, France, and transfer it
to Flextronics International Ltd. The
Singapore-based manufacturer will also take over 830
workers.
Like rival Siemens AG, which said today it would cut
3,500 more employees, Alcatel has been hurt
as consumers and debt-laden phone companies delay
purchases amid an economic slowdown. It
expects sales this year to grow between 5 percent and
15 percent.
``The range of sales growth indicates a very low
level of visibility going forward,'' said Eric Burkel,
an analyst at Global Equities who advises investors
buy Alcatel shares. Still, it ``seems to have
pulled a rabbit out of its hat, publishing sales
growth against our upper forecast of 17 percent.''
Net income fell to 210 million euros ($188 million),
or 18 cents a share, from 258 million euros,
or 26 cents, in the year- earlier period. Sales rose
21 percent to 7.4 billion euros, beating
forecasts.
Alcatel shares rose 1.35 euros, or 4.2 percent, to
33.63, valuing the company at 40.7 billion
euros. The shares have lost 44 percent since the
beginning of the year, compared with a 7.5
percent drop on Paris's benchmark CAC 40 index.
No Bad News
Shares reacted to the lack of bad news, said Philippe
Lecoq, who helps manage about 1.4 billion
euros at Ofimo Gestion in Paris. ``Their outlook is
dim but people were bracing for catastrophic
news,'' he said.
The company's shares trade at about 25 times
estimated 2001 earnings, Lecoq said. ``That's
pretty low,'' Lecoq said.
Ericsson AB, the biggest supplier of wireless
networks, trades at about 40 times estimated
earnings, according to Bloomberg data. Nokia Oyj, the
No. 1 maker of mobile phones, sells shares
at about 37 times and Siemens trades at about 24
times estimated earnings.
Phone equipment makers have been beset by slumping
orders in recent quarters. Ericsson also
farmed out its mobile phone production to Flextronics
to save costs. Lucent Technologies Inc.,
which plans to cut 16,000 jobs, reported a
larger-than-expected loss on Tuesday.
Lucent Bid
Lucent also plans to sell a business that makes
optical fibers used in telecommunications networks.
The unit is expected to fetch about $5 billion,
analysts said. Alcatel today said that it made a bid
for the unit.
``This is a determining event for all the actors in
this market,'' said Serge Tchuruk, Alcatel's chief
executive, at a press conference in Paris. ``Everyone
is looking into it and so are we.''
Tchuruk wouldn't say how much the company bid for the
unit.
Last week, Nortel Networks Corp. said it expected to
cut 20,000 positions by midyear, or a fifth
of its workforce. It reported a widening
first-quarter loss and falling sales on slumping demand for
fiber-optic equipment.
Alcatel said it plans to cut costs by 1 billion euros
this year by saving on travel expenses, delaying
hiring new staff or putting off some research
programs, Chief Financial Officer Jean- Pierre
Halbron said during a conference call with reporters.
Flextronics
Alcatel sold one of its two French handset factories
to Flextronics, which will handle production
and development of mobile phones while Alcatel
handles research and marketing. Alcatel will also
stop phone-making production at its second factory,
which will switch to making optical
components.
``Mobile phones are in crisis in Europe,'' Halbron
said. ``That's hurting us most.''
The company expects the unit, which sold 2.4 million
handsets in the quarter, to return to a
profit by the end of the year, Halbron said.
Alcatel forecast single-digit sales growth for the
second- quarter because of larger losses for the
mobile phone unit in that period. Excluding the
handset unit and the company's cable unit, which
it plans to sell, Alcatel sees second-quarter sales
growth of around 10 percent in the second
quarter.
Operating profit, or earnings before interest and
taxes, rose 4.4 percent in the first quarter to 118
million euros, trailing analysts' consensus it would
grow 12 percent, according to a Bloomberg
poll. Sales in the quarter were expected to grow 16
percent to 7.12 billion euros from 6.12 billion
euros in 2000.
In January, Alcatel forecast full-year sales growth
of 20 to 25 percent. Since, it has reduced its
forecast once, in March, to under 20 percent.
Since taking over in 1995, Tchuruk, 63, has converted
the former state-owned conglomerate,
founded in 1898 as the Compagnie Generale
d'Electricite with businesses ranging from car
batteries to high-speed trains, to focus on
telecommunications.
Earlier this month, Tchuruk said he expected to
complete the sale of Nexans SA, Alcatel's cable
unit, before the summer. After it is sold, all of
Alcatel's revenue will be telecom-related, compared
with 35 percent in 1995. Analysts have valued the
unit, which accounted for 15 percent of sales
last year, at 1 billion euros.
Alcatel's Optronics unit, which makes optical
components, posted a 79 percent jump in net
income to 18.4 million euros in the quarter, as sales
more than doubled to 155.8 million euros.
The company, whose shares rose 4.5 percent to 29.46
euros, forecast a 50 percent sales growth
this year with a 20 percent operating margin. |
