Alcatel-Lucent’s ‘found its space’ — but can’t stem losses, stock hit

Alcatel-Lucent played up its vision and played down its numbers — headlined by a revenue drop of 9.3% from a year ago — citing increased carrier activity in IP-driven transformation activities as reason for optimism moving forward.

Overall, the market hit the vendor hard, dropping its shares by almost 10% in morning trading. The company said its third-quarter loss quadrupled from a year earlier to 182 million euros, or $271 million, as the recession and falling demand for last-generation wireless and traditional voice-based wireline gear dropped sharply. The loss followed a small profit in Q2, which had fueled hope that the vendor had turned the financial corner.

In the face of that financial news, Alcatel-Lucent CEO Ben Verwaayen in an earnings call this morning took pains to point to larger market trends that he believes the vendor is well- positioned to take advantage of. In particular, Verwaayen pointed to a growing “IMS/NGN ecosystem” that is being driven out of aggressive carrier moves to IP in general and long-term evolution (LTE) in particular, which he said only becomes real when viewed on an end-to-end basis that includes an IP core network.

The move to IP is really about carrier transformation, and Verwaayen said that in that concept Alcatel-Lucent has “found our space” — noting that transformation isn’t only about what’s new in the network, but about transitioning from old, legacy networks as well.

“The good news about Alcatel-Lucent is that more and more, I think we've found our space, and our space in the market is transformation,” Verwaayen said. “[For carriers], transformation is not just about I know where the future is, I know where the new stuff is, I know that we have to become a broadband company throughout and it will be based on IP, and I know all the elements have to work together. I also know that I have to do that based on an installed based on billions [of dollars] that are already invested in the past. I have to not only understand what it takes to go forward, but I also need to make it  happen into an organization that has 30, 50, 100 years of experience with networks that are already there. 

“It took us a while to find that space, to articulate that space,” he continued, adding “I think there is a logic now in the way that we look at our company and have structured our company” around that transformation opportunity.

In transformation areas, the vendor reported good progress and in some areas significant growth, including next-generation broadband, 4G wireless, application enablement and managed services. In particular, the company pointed to an IP/optics win with Qwest and LTE trials with France Telecom-Orange, Telefonica and others as proof of transformation-focused wins.

Alcatel-Lucent played up its vision and played down its numbers — headlined by a revenue drop of 9.3% from a year ago — citing increased carrier activity in IP-driven transformation activities as reason for optimism moving forward.

Overall, the market hit the vendor hard, dropping its shares by almost 10% in morning trading. The company said its third-quarter loss quadrupled from a year earlier to 182 million euros, or $271 million, as the recession and falling demand for last-generation wireless and traditional voice-based wireline gear dropped sharply. The loss followed a small profit in Q2, which had fueled hope that the vendor had turned the financial corner.

In the face of that financial news, Alcatel-Lucent CEO Ben Verwaayen in an earnings call this morning took pains to point to larger market trends that he believes the vendor is well- positioned to take advantage of. In particular, Verwaayen pointed to a growing “IMS/NGN ecosystem” that is being driven out of aggressive carrier moves to IP in general and long-term evolution (LTE) in particular, which he said only becomes real when viewed on an end-to-end basis that includes an IP core network.

The move to IP is really about carrier transformation, and Verwaayen said that in that concept Alcatel-Lucent has “found our space” — noting that transformation isn’t only about what’s new in the network, but about transitioning from old, legacy networks as well.

“The good news about Alcatel-Lucent is that more and more, I think we've found our space, and our space in the market is transformation,” Verwaayen said. “[For carriers], transformation is not just about I know where the future is, I know where the new stuff is, I know that we have to become a broadband company throughout and it will be based on IP, and I know all the elements have to work together. I also know that I have to do that based on an installed based on billions [of dollars] that are already invested in the past. I have to not only understand what it takes to go forward, but I also need to make it  happen into an organization that has 30, 50, 100 years of experience with networks that are already there. 

“It took us a while to find that space, to articulate that space,” he continued, adding “I think there is a logic now in the way that we look at our company and have structured our company” around that transformation opportunity.

In transformation areas, the vendor reported good progress and in some areas significant growth, including next-generation broadband, 4G wireless, application enablement and managed services. In particular, the company pointed to an IP/optics win with Qwest and LTE trials with France Telecom-Orange, Telefonica and others as proof of transformation-focused wins.