Alcatel-Lucent posts loss

Alcatel-Lucent has posted a loss yet again: theat reported net loss for the third quarter was €40 million (US$52.64 million) as sales to carriers dropped. The loss is smaller than a year ago, when the company reported a net loss at €345 million.

Revenues came in at €4.065 billion, compared to €4.350 million during the same period last year, a decrease of 6.6 percent. Revenue was also down 0.9 percent from the previous quarter.

At the same time, Alcatel-Lucent reiterated that revenue for the whole year will decrease by a percentage in the low to middle single digits compared to 2007.

Newly appointed CEO Ben Verwaayen is happy to be onboard, but company profitability "remains unsatisfactory," especially in the carrier space, where revenues declined 9.4 percent, at a constant exchange rate and on a year-over-year basis.

The macroeconomic environment has become even more challenging, and in addition to the ongoing CDMA (Code Division Multiple Access) decline, Alcatel-Lucent saw a reduction in spending on fixed access and terrestrial optics, in developed markets, according to Verwaayen.

Even if CDMA is in decline, Alacatel-Lucent remains committed to the technology, according to a spokesman.

The drop could have been bigger but was partly offset by other better performing segments, including strong performance of certain carrier activities, including WCDMA (Wideband Code Division Multiple Access), NGN (Next Generation Networks) and submarine networks, according to Verwaayen.

In addition, the company continued to grow its enterprise business at a healthy rate and saw accelerated growth in services, Verwaayen said.

Enterprise revenues grew 6.3 percent and services revenues grew 16.6 percent, at a constant exchange rate and on a year-over-year basis.

What the future holds for the company's 20.8 percent stake in Thales is uncertain. It is currently reviewing all options including a potential sale.

Verwaayen's goal is of course to return the company to profitability. Details of what Alcatel-Lucent calls a strategic review will to that end be announced in early December, according to a spokesman.

If Alcatel-Lucent wants to become profitable it needs to accelerate its services and software push, according to Jouni Forsman, analyst at Gartner.

"It is very clear that the future for Alcatel-Lucent, and its competitors, is in services and software," he said.

The carrier sector is going through a change similar to what has happened in the IT sector. Hardware is turned into standard buliding blocks, and software and services is instead what differentiates the suppliers, according to Forsman.