Alcatel-Lucent posts loss

Losses at Alcatel-Lucent widened for the fourth quarter of 2008 as the economic outlook forced the company to write down the value of more assets.

Sales for the quarter were also down, by 5.4% from a year earlier to €4.95 billion ($6.98 billion as of Dec. 31, the last day of the period reported) -- although that was still a little better than analysts had expected.

The telecom equipment maker reported a loss for the quarter of €3.87 billion, including goodwill impairment charges of €3.91 billion. In the fourth quarter of 2007 it reported a loss of €2.55 billion, including impairment charges of €2.52 billion.

The write-downs related to activities including CDMA and optical communications equipment, and were made necessary by a drastic deterioration of the global economic climate, which became considerably more challenging in the latter part of the year, Alcatel-Lucent said.

Alcatel-Lucent's services segment was able to post fourth-quarter revenue growth of 6.4% year on year, but other parts of the company saw a drop in sales for the fourth quarter.

Wireless and fixed access were problem areas in the carrier space, but lower sales here were partially offset by the strong performance of other carrier segments, including IP routing, submarine and next-generation networks, Alcatel-Lucent said.

Just like its competitors, Alcatel-Lucent is working to cut costs, aiming to reduce them by €750 million annually by the end of 2009. In December it announced a plan to reduce the number of managers by around 1,000 and the number of contractors by around 5,000.

However, the future continues to look bleak in the telecom sector: Alcatel-Lucent expects the market to be down by 8% to 12% at constant currency rates in 2009.

The IDG News Service is a Network World affiliate.