Alcatel-Lucent flattened by wireless spending cuts

Alcatel-Lucent today lowered its revenue expectations for the year based on discussions with North American wireless carriers.

Though the vendor previously anticipated its annual revenue would grow in the mid-single digits this year (based on a constant euro/U.S. dollar exchange rate), it now expects revenue to be “flat to slightly up,” the company said in a release issued early this morning. The difference could be in excess of $1 billion.

“Alcatel-Lucent is now seeing a change in capital spending with [North American wireless] customers in 2007, compared to what it had anticipated,” the vendor said. “As a result, the company is not seeing the projected volume changes that would have mitigated the ongoing pricing pressures it is experiencing. In other regions and businesses, in particular wireline, enterprise and Asia-Pacific revenue performance continues to be strong.”

Third-quarter revenue should be up slightly from the second quarter, the company said, and fourth-quarter revenue should “ramp up strongly” from the third, driven by broadband deployment and migration to IP architectures.

The change in revenue mix will also impact Alcatel-Lucent’s profitability, especially in the third quarter, in which the company expects its operating income to be “around breakeven.” However, it still plans to exact 600 million euros in merger integration synergies this year.

The news comes just days after one of Alcatel-Lucent’s chief rivals, Ericsson—itself working to integrate acquired assets—boasted of market share gains and increasing demand in the mobile broadband space.