- As expected, soft revenues in the first quarter, at around Euro 3.9
billion, a year over year decline of (8)% at constant Euro/USD exchange
rate
- Adjusted operating income (loss) (1) of approximately Euro (260)
million, half of which is attributed to significant items
- Strong momentum in order flow with a book to bill at 1.3x at the end of the
quarter
- Integration plans on track with 1,900 headcount reduction in
quarter
Paris, April 24, 2007 - Alcatel-Lucent (Euronext Paris and NYSE: ALU)
today announced its preliminary results for first quarter 2007 adjusted results
and provided an update on its integration process and business activities.
Patricia Russo, CEO of Alcatel-Lucent said: “It has been four months since
we completed the merger, and we are making good progress in terms of our
integration. The technology choices have been finalized and the combined
company’s portfolio communicated to our customers. Concerning our cost
saving plans, the net headcount reductions, before recently announced managed
services contract wins, are approximately 1,900 during the quarter, 15% of the
3-year target of 12,500. Associated cost savings will be incorporated in our
operating results going forward.
As previously stated, we anticipated that some of the factors which affected
our business in the fourth quarter 2006 would continue in the early months of
the year leading to some revenue decline. In particular, while parts of our
businesses performed well, our first quarter results were impacted by lower
volumes in traditional wireless and core networks at a time when considerable
investments were made in the next generation of these technologies.
We continued to gain sales momentum during the quarter and increasingly
recognized the benefits of our integration. At the end of the quarter, our book
to bill stands at 1.3x, which leads us to remain confident in our ability to
resume growth as the year progresses. In fact, we have announced a number of
contracts during the quarter, including the USD 6 billion deal with Verizon
Wireless, which represents one of the first major success stories reflecting
the combined company's strengths. We also signed a new strategic UMTS/HSPA
contract with SFR in France, the first in Western Europe since the acquisition
of the 3G UMTS radio activities of Nortel. Additionally, China Mobile selected
Alcatel-Lucent and its partner Datang for its 3G/TD-SCDMA network. These wins
speak to the portfolio decisions we have made and the relationships we continue
to enjoy with some of the world’s largest service providers.
We will comment further on our outlook for 2007 when we announce earnings
with more detail on May 11.”
Revenues for the first quarter of 2007 are estimated to be approximately
Euro 3.9 billion, a year over year decline of around (8)% at a constant
Euro/USD exchange rate or (12)% at current rate. Compared to a strong first
quarter 2006, the lower volume is primarily attributable to wireless radio and
core networks impacting the Wireless and Convergence businesses globally. The
wireless decline is largely driven by lower volumes especially in 2G in some
emerging markets.
The adjusted operating income (loss) (1) is estimated to be at
approximately Euro (260) million, (7)% of sales, half of which is attributed to
unusual significant items. Overall, the loss in the quarter resulted from lower
revenues, mix effect as well as investments we are making in WCDMA and in the
converged core portfolio. In the case of WCDMA, we are transitioning some of
our customer base consistent with our going forward portfolio. As a result,
revenues were low while synergy benefits of the former Alcatel, Lucent and
Nortel WCDMA businesses have not yet been fully realized. We believe these are
important strategic investments to make that will pay off in the future. In the
case of the converged core, the legacy core revenue continued to decline while
we invest in advance of the market impact of the IP network transformations
underway. The adjusted operating income (loss)compares with an adjusted
pro-forma operating income (loss) of Euro 246 million in the first quarter
2006.
In addition, following the successful closing of the Thales transaction, a
capital gain before taxes of around Euro 780 million is expected to be booked
in the first quarter 2007 results.
The quarterly earnings press and analyst conference call will take place on
May 11 at 1:00 p.m. CET (7:00 a.m. EST) and will be broadcast live over the
Internet at www.alcatel-lucent.com/1q2007.
(1) Income (loss) from operating activities before restructuring costs,
impairment of intangible assets and gain (loss) on disposal of consolidated
entities, excluding impacts from follow-up of Lucent's purchase price
allocation.
About Alcatel-Lucent
Alcatel-Lucent (Euronext Paris and NYSE: ALU) provides solutions that enable
service providers, enterprises and governments worldwide, to deliver voice,
data and video communication services to end-users. As a leader in fixed,
mobile and converged broadband networking, IP technologies, applications, and
services, Alcatel-Lucent offers the end-to-end solutions that enable compelling
communications services for people at home, at work and on the move. With
operations in more than 130 countries, Alcatel-Lucent is a local partner with
global reach. The company has the most experienced global services team in the
industry, and one of the largest research, technology and innovation
organizations in the telecommunications industry. Alcatel-Lucent achieved
adjusted proforma revenues of Euro 18.3 billion in 2006 and is incorporated in
France, with executive offices located in Paris. [All figures exclude impact of
activities transferred to Thales]. For more information, visit Alcatel-Lucent
on the Internet: http://www.alcatel-lucent.com
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS
Except for historical information, all other information in this press
release consists of forward-looking statements within the meaning of the US
Private Securities Litigation Reform Act of 1995, as amended. These forward
looking statements include statements regarding the future financial and
operating results of Alcatel-Lucent as well as the benefits and synergies of
the completed merger transaction, benefits to Alcatel-Lucent from its
improvements in product costs and restructuring efforts, improvements in new
technologies, benefits that will result from strategic partnerships,
acquisitions and divestitures and other statements about Alcatel-Lucent
managements' future expectations, beliefs, goals, plans or prospects that are
based on current expectations, estimates, forecasts and projections about
Alcatel-Lucent, as well as Alcatel-Lucent's future performance and the
industries in which Alcatel-Lucent operates, in addition to managements'
assumptions. Words such as "expects," "anticipates,"
"targets," "goals," "projects," "intends,"
"plans," "believes," "seeks," "estimates,"
variations of such words and similar expressions are intended to identify such
forward-looking statements which are not statements of historical facts. These
forward-looking statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to assess.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements. These risks and
uncertainties are based upon a number of important factors including, among
others: our ability to operate effectively in a highly competitive industry
with many participants; our ability to keep pace with technological advances
and correctly identify and invest in the technologies that become commercially
accepted; difficulties and delays in achieving synergies and cost savings;
fluctuations in the telecommunications market; the pricing, cost and other
risks inherent in long-term sales agreements; exposure to the credit risk of
customers; reliance on a limited number of contract manufacturers to supply
products we sell; the social, political and economic risks of our global
operations; the costs and risks associated with pension and postretirement
benefit obligations; the complexity of products sold; changes to existing
regulations or technical standards; existing and future litigation;
difficulties and costs in protecting intellectual property rights and exposure
to infringement claims by others; compliance with environmental, health and
safety laws; whether Alcatel-Lucent can continue to obtain product cost
improvements and to implement cost cutting and restructuring programs and
whether these efforts will achieve their expected benefits, including
improvements in net income, among other benefits; the economic situation in
general (including exchange rate fluctuations) and uncertainties in
Alcatel-Lucent’s customers’ businesses in particular; customer demand for
Alcatel-Lucent’s products and services; control of costs and expenses;
international growth; conditions and growth rates in the telecommunications
industry; the timing of closing and expected benefits from the operations
transferred or to be transferred to Thales and the benefits arising from the
increase in the Company's interest in Thales; and the impact of each of these
factors on sales and income. For a more complete list and description of such
risks and uncertainties, refer to Alcatel-Lucent's Form 20-F for the year ended
December 31, 2005, as amended, as well as other filings by Alcatel-Lucent and
Lucent Technologies Inc. with the US Securities and Exchange Commission
including Lucent's Proxy Statement dated August 7, 2006. Except as required
under the US federal securities laws and the rules and regulations of the US
Securities and Exchange Commission, Alcatel-Lucent disclaims any intention or
obligation to update any forward-looking statements after the distribution of
this news release, whether as a result of new information, future events,
developments, changes in assumptions or otherwise.
About Alcatel-Lucent
Alcatel-Lucent (Euronext Paris and NYSE: ALU) provides solutions that enable
service providers, enterprises and governments worldwide, to deliver voice,
data and video communication services to end-users. As a leader in fixed,
mobile and converged broadband networking, IP technologies, applications, and
services, Alcatel-Lucent offers the end-to-end solutions that enable compelling
communications services for people at home, at work and on the move. With
operations in more than 130 countries, Alcatel-Lucent is a local partner with
global reach. The company has the most experienced global services team in the
industry, and one of the largest research, technology and innovation
organizations in the telecommunications industry. Alcatel-Lucent achieved
adjusted proforma revenues of Euro 18.3 billion in 2006 and is incorporated in
France, with executive offices located in Paris. [All figures exclude impact of
activities transferred to Thales]. For more information, visit Alcatel-Lucent
on the Internet: http://www.alcatel-lucent.com
Contact the Alcatel-Lucent Press Office: press@alcatel-lucent.com
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