Alcatel reported Q1 sales of EUR 2.961 billion, down 31.1% year over year and down sequentially by 34.3%. Loss from operations was registered at EUR 161 million and net loss at EUR 461 million, or a diluted loss of EUR 0.39 per share ($0.43 per ADS). Alcatel cited seasonality and currency exchange issues for the weaker performance. It also noted that carrier markets continue to be soft, and the economic and geopolitical environmental may add a few points to the 15% degradation it had previously predicted for 2003. The non-carrier market is better but for the same reasons may be a few points off from the expected stagnation. Overall Alcatel still expects the market in the second half of 2003 to be comparable to last year, at a constant exchange rate. Nevertheless, Alcatel anticipates that its restructuring programs will enable it to reach an operating breakeven target for the full year. Some highlights for the quarter:
- Revenue for fixed communications equipment decreased sequentially by 34.5% to EUR 1.317 billion. DSL sales were strong worldwide, but were offset by the weakness in the carrier data market. Optical networks decreased substantially, particularly terrestrial transmission where the good performance in traditional cross connects was offset by the continuing depressed WDM long-haul market, especially in the US.
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Revenue for mobile communications decreased sequentially by 37.8% to EUR 798 million. Sales were hit by the temporary unavailability of color screens coupled with pricing pressures on mature monochrome models.
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Revenues for private communications decreased sequentially by 28.4% to EUR 952 million, primarily due to declining space revenues in light of delivery schedules and soft underlying market conditions.
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Gross margin improved to 29.7%, compared to 27.3% for Q4 2002.
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Alcatel ended the quarter with 76,000 employees, down from 119,000 in Q4 2000. The company estimates it will have 60,000 employees at the end of this year.
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Alcatel is targeting a breakeven point at quarterly sales of around EUR 3 billion per quarter at year end.
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