Merger costs, flat sales and a strong euro contributed to a second-quarter net loss at Alcatel-Lucent.

The newly merged French-U.S. telecom equipment vendor posted an adjusted second-quarter net loss of €336 million ($455 million as of June 30, the last day in the period being reported), compared to an adjusted profit of €302 million in the same period a year earlier.

Second-quarter revenue dipped 4% to €4.33 billion, from €4.49 billion the year before.

At constant currency rates, overall revenue would have increased by 0.5% compared with the same period a year earlier. Alcatel-Lucent provides the measure to show how it would have performed if not affected by changes in exchanges rates.

The company has called 2007 "a transition year" as it continues to work on its integration.

Alcatel and Lucent merged last year in a move to fend off growing competition from Asian manufacturers, particularly China's Huawei Technologies, as well as Telefonaktiebolaget LM Ericsson and newly merged Nokia Siemens Networks.

But in most areas, the merger has been so far unable to revive sales.

Sales of equipment in the highly competitive wireless infrastructure market, for instance, dipped 8% to €1.24 billion in the second quarter, from €1.40 billion a year earlier.

One bright spot was enterprise revenue, including voice and data services to businesses, which increased 5% to €376 million, from €368 million.

The IDG News Service is a Network World affiliate.