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

To: Dale Baker who wrote (3382)	5/29/2001 9:08:04 PM
From: zbyslaw owczarczyk	Read Replies (2) \| Respond to of 3891

Alcatel decides to accelerate strategic repositioning on service provider market Alcatel to take one time non-cash charge in exceptional items in 2Q01 alcatel.com Alcatel decides to accelerate strategic repositioning on service provider market Alcatel to take one time non-cash charge in exceptional items in 2Q01 Paris, Tuesday, 29 May, 2001. Alcatel’s (Paris : CGEP. and NYSE: ALA) Board of Directors met Tuesday to study matters involving the Group’s strategy and the most recent market trends and their likely impact on 2Q01and 2001 results. The Board has decided to reinforce the strategic focus of Alcatel on service provider networks which includes Carrier Networking and Optics segments as well as Space activities. Together these represent now over 80% of Alcatel’s telecom business. This focus will lead to expedite re-engineering, strategic alliances and divestitures of other current Alcatel’s activities or assets. In particular, the following strategic moves are being promoted : Nexans : the IPO is likely to take place in Q2 at a price yet to be defined. Alcatel expects to incur a write down in conjunction with such offering. Cellular handsets : initial steps have been taken with the termination of manufacturing in one of the two European plants and the projected outsourcing of the second one. Alcatel’s exit of the cellular handset manufacturing will require some provisions. Enterprise business : the long term strength of this business segment is seen as dependant on alliances leveraging Alcatel’s strong technology in converged voice/data systems and market leadership in Europe. The sale of the enterprise distribution activity, which is now established as a standalone activity, is currently under review. Part of the US goodwill connected with this activity will be written down. The following market circumstances were also particularly noted : The likely deferral of 360N submarine Pacific network beyond 2001. The continuing slowdown in US and some parts of Europe, Under current conditions, Alcatel’s service providers business, proving to be robust, is still likely to progress around 10% in 2001 in revenues and to have an operating income around last year’s level. In the e-Business segment, losses are due in large part to the very weak cellular handset market in Europe. With these contrasting trends, even if the total telecom revenue should grow by a few percent, the corresponding operating income is now seen below that of last year. In the light of these current market uncertainties and in respect with the traditional conservative policies for valuing all company assets, the Board decided to book non-cash reserves of around €3.0Bn in Q2 01 that will impact the operating income and/or the net income. Consequently, Alcatel now sees its Telecom operating income for the second quarter above €100 M and a loss of around € 3.0 Bn for the net income. Included in these results are: Restructuring consequences of the strategic moves mentioned above A write-down of inventories A write-down of 360Networks convertible bonds The forecasted 2nd quarter net income does not include any of the €2B capital gain that Alcatel believes it can achieve through the disposal program to be achieved before the end of the year. About Alcatel Alcatel (Paris: CGEP.PA and NYSE: ALA) builds next generation networks, delivering integrated end-to-end voice and data networking solutions to established and new carriers, as well as enterprises and consumers worldwide. With 130,000 employees and sales of EURO 31 billion in 2000, Alcatel operates in more than 130 countries. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements relating to the Company’s expectations for sales and profitability for 2001. Such expectations assume that (i) current market trends in sales will not change and operating profits will continue to improve, (ii) the Company will benefit from growth in the telecommunications market, (iii) the Company’s sales volume will increase in several product markets, and (iv) customer spending patterns will not change. Unfavorable changes in the above or other factors listed under "Risk Factors" from time to time in Alcatel’s SEC reports, including the Prospectus relating to the offering of Alcatel’s Class O shares dated October 20, 2000 could materially affect Alcatel Optronics. Contact press@www.alcatel.com