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Alcatel-Lucent cuts losses but shares slump

Telecommunication equipment group Alcatel-Lucent said Thursday (July 31) it cut net losses by more than half in the second quarter as it battles to rebuild after years of setbacks. 

PARIS: Telecommunication equipment group Alcatel-Lucent said Thursday (July 31) it cut net losses by more than half in the second quarter as it battles to rebuild after years of setbacks. But its shares plunged 8.71 per cent to 2.59 euros in morning trading, while the overall Paris market as measured by the CAC 40 index was down 0.87 per cent.

Alcatel-Lucent said its quarterly net loss was 298 million euros (US$399 million, S$497 million), down from 885 million euros for the same period last year. However, it said the improvement largely reflected the fact that the company had taken a big depreciation charge in the second quarter of last year.

By contrast, operating profit rose three-fold to 136 million euros, although sales fell by 4.6 per cent to 3.2 billion euros, which the company said reflected the strategy of restructuring activities for managing services.

At brokers Global Equities, Xavier de Villepion said that "given that the overall trend of the market is bad, taking down all shares considered at risk of which Alcatel-Lucent is one."

European stock markets are overshadowed by the possible impact on quoted companies of sanctions against Russia.

The group, a leading global provider of equipment to the telecommunications industries, also announced that it intended to float its underwater cable subsidiary Alcatel Submarine Networks (ASN).

The gross operating margin, a key measure of basic profitability, was 32.6 per cent of sales, reflecting cuts in fixed costs, the group said. It also reported that under its restructuring strategy called "Plan Shift" launched a year ago it had succeeded in restructuring debt of 2.0 billion euros.

Alcatel-Lucent has experienced years of disappointing restructuring plans since it was formed through the merger of French company Alcatel and US firm Lucent, owing partly to competition from Asia, but high hopes were raised again last year when the group launched yet another initiative under a new chief executive.

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