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Alcatel-Lucent reports third quarter losses

Chris Andrews

Applications software and LTE could help with recovery

Alcatel-Lucent has reported its third quarter results, and while it has seen its losses increase and sales drop compared to the same period last year, it still expects 2009 to be a break-even year.

The company said it expects the global telecommunications equipment and related services market to be down between 8% and 12% in 2009. The third quarter saw its own revenue decrease by 9.3% year-over-year and 5.6% sequentially, to €3.687bn. It said it saw a double-digit decline in revenue in its carrier segment, driven by 2G wireless access, TDM switching and terrestrial optics, though it did experience moderate growth in fixed broadband access, good growth in IP and strong growth in submarine optics, fixed NGN/IMS and W-CDMA.

There was also good news for both Alcatel-Lucent’s Services segment, which saw revenues of €869 million, or an increase of 2.5% from last year, and in particular its applications software revenues, which saw double-digit growth. This translated to €286 million, or an increase of 19.7% on Q3 2008.

Carrier applications revenue grew in the low thirties, which the company said highlighted the positive customer response to its focus on that applications enablement. Growth was very strong in digital media & advertising, professional services, remote customer management software (Motive) and maintenance.

Ben Verwaayen, Alcatel-Lucent’s chief executive said his company was winning in areas of differentiation, including IP transformation, next generation broadband & wireless, application enablement and services. “This is demonstrated in our wins with Qwest in merging IP and optics into a combined solution, Singapore’s Nucleus Connect in application enablement, and the securing of LTE trials with France Telecom-Orange, Telefonica and Etisalat, bringing our total number of LTE trials to 16.

“Against what remains a challenging market environment, we reiterate our view that our addressable market should be down between 8% and 12% at constant currency and that we will achieve an adjusted operating income around breakeven this year,” he said.

On that point about LTE, France Telecom-Orange has selected Alcatel-Lucent for an LTE field trial in both FDD (Frequency Division Duplex) and TDD (Time Division Duplex) modes.

The technical trial aims to provide a full assessment of the end-to-end performance of LTE and will take place in the south region of Paris, using Alcatel-Lucent’s e-nodeBs and evolved packet core.

LTE (Long-Term Evolution) roll-out is part of the company's planned turnaround, and it could end up a success story. LTE, of course, is expected to be the next major standard in mobile broadband technology and carriers have already begun to convert their networks. Fourteen LTE networks are anticipated to be in service by the end of 2010 in the U.S., Canada, Japan, Norway, South Korea and Sweden, according to data from the Global mobile Suppliers Association.

GSA has also confirmed that in total there are 42 LTE network commitments in 21 countries with the number of operators committed to LTE deployment increasing by 35% over the past 6 months. If this carries on at pace then it is obviously good news for Alcatel-Lucent which is making a clear effort to establish itself at the coalface of LTE deployment.

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