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Alcatel-Lucent Offers Another Grim Financial Report

Alcatel-Lucent replaced its previous prediction of an increase in revenue growth of about 5% with a full-year revenue growth forecast of flat or slightly up.

For the third time this year, Alcatel-Lucent has cut its financial forecast, causing the recently-merged company's stock to plunge.

In the latest forecast, reported Thursday, Alcatel-Lucent replaced its previous prediction of an increase in revenue growth of about 5% with a full-year revenue growth forecast of flat or slightly up. The firm added that the revenue numbers are expected to impact profits negatively "especially in the current quarter. For the third quarter 2007, the operating income is expected to be around breakeven."

The U.S.-based operation, formerly Lucent Technologies, has been in a downward spiral since the implosion of the telecom bubble in the early part of this decade.

In an interview Thursday in the Wall Street Journal, chief executive Patricia Russo denied that the firm was losing market share in wireless communications to Telefon AB LM Ericsson, whose chief executive had recently claimed it was gaining share from Alcatel-Lucent.

"Our global share in CDMA is somewhere in the 45%-46% range globally and more in North America," she said. "No, we are not losing market share."

Russo reported some figures on its product lines. She said Alcatel-Lucent has signed up more than 40 customers for its wideband CDMA (W-CDMA) since the merger. Russo also noted that Alcatel-Lucent has a strong commitment to WiMax.

"WiMax is an area where we've been investing" she said. "We have over 70 trials, we're still early in the WiMax opportunity from a market standpoint. We have announced over 15 commercial contracts. So we see good opportunity with WiMax."

The downward financial revision is based on changes in plans by some wireless customers in North America, the company said. "The company is not seeing the projected volume changes that would have mitigated the ongoing pricing pressues it is experiencing," it stated.

Conversely, the company said revenues in other regions and businesses -- especially in wireline, enterprise, and Asia-Pacific areas -- are strong.

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