Telecom equipment giant, Alcatel-Lucent, reported a notable decline in second-quarter profit margins yesterday, amid a second consecutive quarterly loss during the three-month period ending on June 30.
The transatlantic company, formed last year by the merger of France’s Alcatel and America’s Lucent, reported a net loss of €586 million ($800.4 million) for Q2, compared to a combined profit of €128 million in the second quarter of 2006. The loss included a €250 million merger-related amortization payment.
Gross profit margins also slid significantly to 33.4%, from 38% in the year-ago period.
“2007 is clearly a transition year for the company as we continue to execute on our integration plans in a rapidly changing industry,” commented CEO, Patricia Russo, in a statement. “We believe the gross margin level this quarter is not indicative of the business going forward.”
Market analysts were concerned about the company’s poor performance, however, even questioning its ability to compete. As results continue on a downward spiral, the “merger integration” excuse seems to be wearing thin.
“Things look very bad,” said Nomura analyst, Richard Windsor. “Ericsson margins in the mobile infrastructure business are excellent. Alcatel-Lucent margins are so weak it shows there is no way they can compete with Ericsson.”
Source: http://www.teleclick.ca
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