Alcatel CEO: Chinese not leading price war

Though Chinese equipment vendors such as Huwaei Technologies and ZTE are often feared as cut-throat price warriors, they are not always the worst offenders, said Serge Tchuruk, Alcatel’s Chief Executive Officer, while discussing the intense price pressure squeezing the company’s margins in mobile equipment markets.

“The Chinese [vendors] are still around, but the Chinese are not necessarily always the most active in depressing prices,” Tchuruk said, referring to the mobile market. “Today one of the largest players on the scene losing market share is the most active in depressing prices.”

“I hope this is not going to last forever, and I do believe it cannot last forever,” he said.

Mobile pricing pressure cut into Alcatel’s margins in the first quarter, dampening otherwise solid results. The equipment vendor reported a net income of 104 million euros and revenue up 18% from a year earlier to more than 3 billion euros. The vendor’s DSL shipments were up 50% from a year earlier (to 6 million lines), and its first-quarter sales of IP edge gear were ten times what they were a year earlier. However, the company’s gross margin was 34.9%, down from 36.4% last year.

To combat intense competition in the mobile space, Alcatel ratcheted up its investments in marketing and research and development in that area during the first quarter, the company said.