Jan 23, 2007 10:22 AM,

Alcatel-Lucent issues Q4 warning

By Dan O'Shea

Alcatel-Lucent won't report quarterly earnings for the first time as a combined company until Feb. 9, but already the new megamerger in town has issued a warning that fourth-quarter 2006 revenue will be lower than Alcatel's 2005 figure--and that new cost-cutting measures may lie ahead.

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The company announced this morning that pro forma financial results adjusted to account for Alcatel's acquisition of Lucent, which took effect last month, include revenue of just over $5.75 billion (U.S.) for the fourth quarter, which would be sharply down from the $6.8 billion reported for the fourth quarter of 2005. Revenue for the full year is expected to come in at $23.8 billion, slightly under the $24.2 billion reported for 2005 by Alcatel. (Alcatel announced the acquisition of Lucent Technologies last February.)

Alcatel-Lucent CEO Pat Russo said in a company statement, "The last quarter of the year proved to be challenging from a market perspective, driven by a shift in spending from some of our large North American customers and heightened competition in the global wireless market. Overall, the 2006 adjusted pro-forma financial results of the combined company were impacted by the weak performance in the fourth quarter resulting in cumulative revenues for full year 2006 at a similar level to full year 2005 revenues."

She added, "In a market that continues to be highly competitive, Alcatel-Lucent has decided to take additional actions to further reduce its cost structure." However, the company revealed no further details about what kind of cost-cutting measure would be taken. Alcatel and Lucent said prior to their merger closing that almost 9000 jobs would be eliminated from the combined company over a span of several years.

Alcatel-Lucent's fourth-quarter warning comes shortly after several other vendors issued quarterly financial warnings.

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