Alcatel Ends Tough Year in Big Loss
NYTimes February 1, 2002
PARIS, Jan. 31 - Alcatel, the French maker of telecommunications equipment, reported a net loss of 4.96 billion euros, or $4.2 billion, for all of last year, the largest loss ever reported by a French corporation. And though it voiced optimism for 2002, it said the year would remain difficult.
Alcatel is following in the footsteps of big rivals, like Ericsson of Sweden, which this week reported its first unprofitable year in half a century. The companies have been hurt by the inability of the telecommunications industry, mired in debt, to move ahead with the extension of new networks to provide continuous service via the Internet.
Alcatel had cautioned that its loss for last year would be as large as 5 billion euros, much of which resulted from a one-time charge of 3.86 billion euros to reorganize money-losing divisions. Investors, apparently impressed by the company's strides toward restoring profitability, its improved outlook for 2002 and its ambitious debt-reduction program, sent the share price up more than 4 percent at one point. Alcatel closed up 2.3 percent, at 17.60 euros.
Analysts at several brokerage firms expressed satisfaction with Alcatel's progress and positive outlook. Société Générale, for instance, lifted its recommendation for Alcatel to buy from hold, with a price target of 22 euros.
To reduce debt, Alcatel began a drive to sell assets, including shares in major French corporations like the electronics group Thales, Thompson Multimedia, which makes RCA television sets, and the power company Alstom. Sales of shares in those companies earned Alcatel 900 million euros last year.
Alcatel, which failed in an attempt last year to buy Lucent Technologies, announced in July that it would make sharp cuts in its work force and take heavy write-downs of inventory to lighten the financial burden of equipment stocks it found itself unable to sell, as telecommunications companies around the globe found demand for their products evaporating.
Serge Tchuruk, Alcatel's chairman and chief executive, said the bitter medicine swallowed last year would enable the company to perform reasonably well this year. Alcatel, he said at a news conference, "should benefit in 2002 from the cleanup of our balance sheet completed at the end of 2001, and from the downward trending of quarterly expenses." But he said 2002 would remain challenging.
Alcatel expects revenue in the first quarter to drop 30 percent, to 6.7 billion euros, from the fourth quarter last year. But Mr. Tchuruk said he was confident the company's performance would improve thereafter, enabling it to generate an operating profit for the full year.
In recent months, Alcatel announced that it would eliminate roughly 34,500 jobs globally, so that its work force at the end of 2001 stood at 99,300, from 113,000 a year earlier. At affiliates in the United States, the number of employees was expected to drop to 10,000 from 16,000.
Perhaps the greatest success was in getting unsalable inventories off the books. On Dec. 31, inventories were valued at 4.68 billion euros, against 6.5 billion euros on Sept. 30, well below a target of 5.5 billion euros that Mr. Tchuruk announced in October. |
