Alcatel DSL shipments up

In reporting fourth quarter net net profit of $52 million this week, Alcatel said it added to its market share lead, capturing 40% of the global DSL market. On a raw numbers basis, the company said it shipped the equivalent of about 49 million lines of DSL last year.

The company’s shares recovered slightly today after being pounded yesterday when it gave a lackluster forecast for sales in the first quarter of 2005 and said it would pay out a dividend to investors this year.

Additionally, revenues for fixed line communications business dropped 1.6% over the same quarter in 2003 in part because of what Serge Tchuruk, Chairman and CEO of Alcatel, said was “softness in North America.” Additionally, the company was hurt by deployment delays by Chinese operators.

However, he also said during a conference call with analysts and investors that the company has been making some bets that should pay off soon.

“We invested in some positions in early markets like India and Brazil,” he said. “We are for good back to profitable growth.”

Jean-Charles Doineau, Research Director with Ovum wrote in a research note today that the company will benefit from its investments in developing markets because they represent a better long-term source of growth. “Nevertheless, the French network equipment vendor has incurred important additional costs in these markets, reflected in the decrease of the gross margin of the company (34.4% in Q4 versus 38.2% in Q3),” Doineau wrote.