Citing delayed sales to some wireless operators in North America, Alcatel-Lucent trimmed its full year 2007 revenue outlook, saying revenue growth is now likely to be flat to slightly up at a constant Euro/USD exchange rate. The company had previously estimated that its revenue would grow in the mid single digits at a constant rate.
The company’s revenue for the fourth quarter 2007 is still expected to ramp-up strongly over the third quarter 2007. Additionally, the change in revenue mix is expected to negatively impact the profitability of the company, especially in the current quarter. For the third quarter 2007, the operating income (loss) is expected to be around breakeven.
As for the weakness in Q3 sales, Alcatel-Lucent said it is now seeing a change in capital spending with major North American wireless carriers in 2007, compared to what it had anticipated. As a result, the company is not seeing the projected volume changes that would have mitigated the ongoing pricing pressures it is experiencing. In other regions and businesses, in particular wireline, enterprise and Asia-Pacific revenue performance continues to be strong.
Alcatel-Lucent noted that it is planning to achieve its synergy related pre-tax savings of EUR 600 million this year. As the company has previously said for this year, it will not retain its gross margin savings due to competitive market conditions but expects it will retain most of its operating expense savings on a comparable basis.
Alcatel-Lucent continues to expect a strong sequential revenue growth in the fourth quarter, driven by IP transformation, broadband deployment and associated services.
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