Citing increased traction for its High Leverage Network (HLN) strategy and improved operational performance, Alcatel-Lucent reported Q4 2010 revenues of Euro 4.862 billion, up 22.6% year-over-year and up 19.3% sequentially. At constant currency exchange rates and perimeter, revenue increased 15.1% year-over-year and increased 21.9% sequentially.
“I am energized by the progress we have made over the past two years. We have overhauled our product portfolio, introduced our High Leverage Network and Application Enablement strategy, increased our customer relevance and improved our operational excellence, highlighted by the outstanding revenue growth and strong margin performance in the fourth quarter,” commented Ben Verwaayen, Alcatel-Lucent’s CEO.
From a geographic standpoint, all regions experienced revenue growth with strong traction in North America, double digit growth in Rest of World driven by Brazil and Mexico and high single digit rate growth in Europe and Asia Pacific with Eastern Europe and Western Europe progressing at the same pace and accelerating growth in China.
Some highlights for the quarter:
NETWORKS
- For Q4 2010, revenues for the Networks segment were Euro 2.952 billion, an increase of 31.7% compared to Euro 2.242 billion in the year-ago quarter and an increase of 20.0% compared to Euro 2.459 billion in the third quarter 2010.
- Revenues for the IP division were Euro 508 million, an increase of 58.8% from the year-ago quarter as IP/MPLS service router revenues nearly doubled their year-ago Full-year revenue for the IP division increased 24.4% in 2010, with a 40%+ increase in service routing.
- Revenues for the Optics division were Euro 815 million, an increase of 6.8% from the year-ago quarter as growth picked up significantly from its pace earlier in the year. The terrestrial business was particularly strong, driven by near 50% growth in the WDM segment, and good progression across the entire portfolio and all regions driving a second consecutive quarter of growth.
- Revenues for the Wireless division were Euro 1.156 billion, an increase of 44.5% from the year ago quarter. Strong growth continued across the wireless portfolio, with 56% growth in our W-CDMA business, 32% growth in CDMA and 14% in GSM. The company recorded its first significant LTE revenues this quarter. Growth remained particularly strong in the Americas, where revenues nearly doubled from their year-ago level, and in the Asia-Pacific region growth was also very strong, contributing for most of the growth in W-CDMA and most of the double-digit growth in GSM.
- Revenues for the Wireline division were Euro 488 million, as year-over-year growth picked up from -13% in the first three quarters to a strong 22.6% in the fourth quarter. Legacy TDM switching continued its decline, but growth was widespread elsewhere in the portfolio. Overall broadband access — including ADSL, VDSL, GPON and home networking — increased for the second consecutive quarter, with very strong growth in GPON driven by Asia-Pacific region and renewed growth in IP-DSLAM business driven by EMEA region. IMS core networking revenues also increased very strongly.
- Sales of next-generation Networks products increased 72% from the year-ago quarter and reached Euro 1.361 billion in the fourth quarter. This accounts for 46% of Networks sales, vs. 32% in the first quarter of 2009.
APPLICATIONS
- For the fourth quarter 2010, revenues for the Applications segment were Euro 575million, an increase of 7.5% compared to Euro 535 million in the year-ago quarter and an increase of 15.2% compared to Euro 499 million in the third quarter 2010. At constant currency exchange rates, Applications revenues increased 1.7% year-over-year and increased 17.6% sequentially. The segment posted an adjusted2 operating1 profit of Euro 47 million or an operating margin of 8.2% compared to an adjusted2 operating1 profit of Euro 80 million or a margin of 15% in the year ago period.
- Network applications revenues of Euro 251 million increased 8.2% from the year-ago period in the fourth quarter, led by very strong growth in Digital Media & Advertising and our Motive solution (remote customer management).
- The Motive business has expanded its focus to include opportunities in the mobile market — managing mobile devices and mobile home networks. Revenues in our Applications Maintenance business also increased, registering a fourth consecutive double-digit gain over the year-ago quarter. For the year, double-digit growth in Digital Media & Advertising, Applications Maintenance and Applications Professional Services (software customization) was largely offset by declines in spending for legacy payment and messaging applications, limiting the 2010 increase in Network applications revenue to 2.2%.
- Revenues in our Enterprise applications business increased 4.1% over the year-ago quarter, reaching Euro 330 million in the fourth quarter. The data networking business continued its good double digit growth and included initial revenues for new 10-Gigabit Ethernet switch launched one quarter ago.
SERVICES
- For the fourth quarter 2010, revenues for the Services segment were Euro 1.140 billion, an increase of 10.7% compared to Euro 1.030 billion in the year-ago quarter and an increase of 20.3% compared to Euro 948 million in the third quarter 2010.
- Double-digit growth continued in Managed and Outsourcing Solutions business in the fourth quarter and for the full year as a whole, driven by growth in EMEA.
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