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To: Ok2Launch who wrote (5464)	3/11/1999 11:34:00 AM
From: Charles L. Bushey	Read Replies (1) \| Respond to of 10852

News release with some Skybridge comments from Alcatel chairman Tchuruk; ReutersPlus, Thursday, March 11, 1999 at 08:28 PARIS, March 11 (Reuters) - Alcatel chairman Serge Tchuruk detailed his company's results outlook at a news conference on Thursday. Following are the main points: * Telecom sales in the U.S. are expected to rise to more than $6.0 billion in 2001 compared with some $330 million in 1995. Of this amount, $5.0 billion is based on the assets available at the end of 1998. The final billion is due to the recent purchases of Xylan (NASDAQ:XYLN), Packet Engines and Assured Access. * Restructuring in 1999 and 2000 will shed another 12,000 jobs from the worldwide base of 120,000. Some 70 percent has already been announced. The remainder, in large part, will be in the United States due to the integration of DSC and the dismantling of Alcatel Data Networks (ADN) after the Xylan acquisition. * Alcatel expects to use 1.05 billion euros ($1.15 billion) of existing provisions for restructuring in the 1999-2000 period and will take 300 million in new provisions. It expects to achieve cost savings of 300 million euros over the next two years. * Alcatel should come close to achieving its profitability targets in 2000 after a consolidation year in 1999. * In the past two years, sales at telecoms have increased with a compound growth rate of more than 15 percent while operating income went to a profit of 616 million euros from a loss of 200 million. Return on sales (ROS) is four percent. * In the next two years, Alcatel aims to grow above the market average and reach seven percent ROS at telecoms. * The new Internet and Optics group had pro forma 1998 ROS of nine percent. Internet product sales, from almost nothing, should reach one billion euros in 2000. * Permanent product redesign will allow for 15 to 20 percent product cost reduction per year. The cost of the main BTS G3 product for mobile switching was cut by 33 percent in 1998 and a 25 percent fall is expected in 1999. * In optic cables, Alcatel expects sales of one billion euros in 1999, launching a raft of new products. * Alcatel wants to eliminate losses and return to profit in growth areas where economic performance had been sub-standard, such as cellular infrastructure and enterprise markets. * It wants to ride the Internet wave with a strong product portfolio and networking integration capability, becoming a key player in Internet Protocol end-to-end solutions and transfer the declining narrow band voice systems to data. * Sales of ADSL systems are seen rising to 300 shipments in the fourth quarter of 1999 from less than 50 in the fourth quarter of 1998. In 2000, shipments will double. * Skybridge satellite project advancing and is ahead of rival Teledesic (NYSE:MOT) (NYSE:BA). Tchuruk expects to announce a number of deals in 1999 with telecom operators. * Networking group had pro forma 1998 ROS of 4.8 percent. In cellular infrastructure, a product development deal with Motorola (NYSE:MOT) will reduce research costs on the new UMTS standard. Sales are expected to rise in Europe and China. Chief Operating Officer Jo Cornu said Alcatel is working on IP-based mobile communications for 2003/2004. * Cellular infrastructure to reach breakeven target in 1999 and medium profitability in 2000. Networking to remain a significant contributor to Alcatel with rising ROS. * Enterprise and Consumer grouop had proforma 1998 operating loss of 170 million euros. This included 70 million euro charge at Alcatel Data Networks and 90 million euros for operating loss and clean-up at Alcatel SEL in Germany. * Xylan, which Alcatel agreed to buy earlier this month, will have increased enterprise product sales of 700 million euros in 2000 from 320 million in 1998. ROS stays at 15 percent. * Combined Alcatel and Xylan enterprise business should see sales grow to 1.7 billion euros in 2000 with ROS postive after 1998 loss. * Tchuruk said Alcatel was still in talks with the government about shedding 44 percent stake in nuclear engineering group Framatome (SBF:SOUR). He declined comment on rumours he could swap the stake with the government for larger stake in Thomson-CSF (SBF:TCFP). * Tchuruk said potential asset gains in holdings such as Alstom, where it has 24 percent, more than three billion euros. e-mail paris.newsroom@reuters.com)) ($1=.9170 Euro) Copyright 1999, Reuters News Service