Alcatel-Lucent’s profits plummet

Alcatel-Lucent's merger has created "uncertainties" for its customer base, its CEO said, adding that the firm will take additional cost-cutting measures to return to profit.

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By  Administrator Published  January 25, 2007

Alcatel-Lucent's merger has created "uncertainties" for its customer base, its CEO said, adding that the firm will take additional cost-cutting measures to return to profit.

The telecoms equipment maker said this week that it expects its Q4 operating profit to have fallen from US$739million in the same period a year before to approximately breakeven, based on the combined companies' accounts.

Alcatel-Lucent was created last year from the merger of French group Alcatel with US-based rival Lucent.

Describing 2006 as "an extraordinary year" CEO Patricia Russo said in the statement announcing the firm's preliminary results that the merger had helped to create "short-term uncertainty for our customers and for our people" and that this uncertainty "together with the work required to close the merger, significantly impacted the business."

Russo said the quarter had also seen "challenging" market conditions, with heightened competition in the global wireless market.

"In a market that continues to be highly competitive, Alcatel-Lucent has decided to take additional actions to further reduce its cost structure," Russo said in the statement, without clarifying what those measures would be. Previously announced cost-cutting measures included the axing of 9,000 jobs.

Following the completion of the merger last December, Vincenzo Nesci, vice president of the regional unit, told IT Weekly that he did not expect the merger to lead to job cuts here. "We expect the merger to give us the possibility to enlarge our footprint in the Middle East," he said at the time.

Recent customer wins for Alcatel-Lucent in the region include an internet protocol (IP) communications system at Dubai International Airport's planned third terminal.

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