Alcatel reported Q1 revenues of EUR 2.607 billion, up from EUR 2.515 for Q1 2004 but down from EUR 3.806 billion for Q4 2004. Operating profit amounted to EUR 107 million, representing a 4.1% operating margin and a 27% increase over the same period last year.
Serge Tchuruk, Alcatel’s Chairman and CEO, said “In the fixed line business, we confirm our expectations of a rebound in the second half, following a second quarter which will continue to be weak. This rebound should materialize as triple play generated revenues more than offset the decline in traditional products, leading to stable revenues for the full year.”
Some highlights:
Fixed communications
First quarter revenues decreased by 9.1% to EUR 987 million from EUR 1,086 million in the same period last year. The decline in revenues is primarily due to an expected and temporary slight loss in market share in access due to a product shift, and a higher than usual seasonality impact in traditional voice switching. This decrease is not yet offset by growing revenues in IP, optics and applications, and, to a lesser extent, maintenance services and NGN replacement business. The optics business turned in a particularly strong performance, driven by some rebound in the submarine activity, and next generation metro core optics, which has now registered 20 customers. The IP activity continued to grow at a rapid pace, driven by strong demand in all geographical regions. Volumes in DSL lines reached 3.9 million during the first quarter. Alcatel now has 15 large customers for its new IP DSLAM, launched in Q3 2004.
Mobile communications
First quarter revenue increased by 27.9% to EUR 789 million from EUR 617 million in the same period last year. Radio infrastructure continued to show strong growth in emerging markets, in particular China, Russia, India and Brazil. The market for 3G indoor coverage is developing in Western Europe and Telefonica Spain has selected Alcatel to deploy its 3G Indoor Solutions. In mobile core, a very strong activity in the traditional MSC technology has been registered to support the capacity expansion of the installed base and the upgrade of traditional networks to 3G. In NGN-IMS, in addition to the strong success in the U.S. for 2G and 3G with T-Mobile, Cingular, and Dobson, very significant commercial activity was registered outside the U.S. with twelve field trials and many positive prospects. Applications also grew significantly, driven by worldwide video/music services deployment in 2.5G and 3G, as well as sustained growth in convergent payment solutions.
Private communications
First quarter revenues were stable at EUR 848 million compared with EUR 849 million in the same period last year. In the enterprise market, revenues were impacted by a slow uptake in voice services. Despite this slow start, market share was maintained in IP voice which represented one third of enterprise voice shipments. Genesys turned in a solid performance maintaining its leadership position in all markets. Satellite revenues were weak due to a low backlog in the commercial telecom activity. Revenues in vertical market applications continued to grow. In particular, rail signalling networks showed strong growth, largely driven by main lines activities, in Western and Eastern Europe, leveraging the ETCS (European Transport Control System) technology. Integration services grew, driven by a strong backlog in safety and security systems both in the transport, energy markets and in the public sector.
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