Alcatel-Lucent Sales Up, Stock Down
Pressure on margins cited for stock price decline of nearly 10%, while wireless business spurred 3Q results.
Alcatel-Lucent recorded a profit in its third quarter, as the company predicted continued rising sales and profits. Nonetheless, the company’s stock plunged by nearly 10% on the news, which was tempered by pressure on the firm’s margins.
The company, a combination of Alcatel of France and Lucent Technologies of the U.S., said its wireless division sales were “particularly strong” in North America due to data traffic growth.
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The telecommunications infrastructure company also reported that it landed several global contracts with the Asian-Pacific region faring well, in addition to good growth in India and China. Also in the U.S., Alcatel-Lucent boasted that its GPON technology was used by EPB Fiber of Chattanooga to produce the first 1 Gigabit/second broadband residential-business network in the U.S.
Sales for the quarter were $5.79 billion, up 10.5% over the previous year’s third quarter.
“We anticipate a significant sequential increase in our top line in the fourth quarter,” said CEO Ben Verwaayen in a statement. “This, combined with our actions on costs, will lead to a strong leverage effect at the operating profit level. We maintain our full year outlook.” The company is predicting operating margin growth of between 1% and 5% for the next quarter.
Components shortages, Verwaayen said, were acting as a damper on growth, but he added that he expects them to clear up in future quarters.
Another strong area in networking -- Ethernet -- performed well in the quarter for Alcatel-Lucent, with a new 10 Gigabit Ethernet switch for enterprise core networks well received by customers, the company said. “Data networking was particularly strong,” according to the company, “with year-over-year growth in excess of 20%.”
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