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Alcatel-Lucent posts Q4 net profit, readies sale of enterprise unit

Alcatel-Lucent posts Q4 net profit, readies sale of enterprise unit

The company's restructuring plan Shift is on track, it said

Alcatel-Lucent's revenue remained flat, but the company turned a year-earlier loss into a net profit for the fourth quarter.

The company has also found a buyer for its enterprise networking unit, it said.

Sales for the quarter totalled €3.93 billion ($US5.41 billion as of December 31, the last day of the period reported), down 0.1 per cent year-on-year. The company made a net profit of €134 million, up from a €1.56 billion loss during the year-earlier quarter.

Wireless access, which includes LTE networks, was the best performing product category. Revenue from fixed access and IP transport products also increased, while managed services and IP routing segments struggled.

The net profit is good news for Alcatel-Lucent CEO, Michel Combes, who joined the company in February last year with the intention of turning around a company that has been struggling for a number of years.

However, the company and Combes still have a lot of work do to. The fourth-quarter profit stands in stark contrast with Alcatel-Lucent's performance for the full year, for which it reported a €1.3 billion net loss. But that is a step in the right direction compared to the €2.01 billion loss it reported during 2012.

The improvements are a result of Alcatel-Lucent's Shift plan, which was announced at the beginning of October and is on track, the company said. According to the plan, Alcatel-Lucent will cut 15,000 jobs over the next two years, and create 5,000 others as it seeks to focus on sales of IP networking and broadband equipment for fixed and wireless access networks.

Part of the plan is also to shed some units that don't fit with that focus, including the Enterprise unit, which makes IP telephony and Ethernet switching equipment. It has received a binding offer for that from technology investment company China Huaxin, valuing the unit at €268 million. Alcatel-Lucent plans to retain a 15 percent minority interest, it said.

Alcatel-Lucent will shortly submit the proposed transaction to the Enterprise unit's workers councils for the required information and consultation procedures. It expects to sign a definitive agreement during the second quarter, and the deal will then close during the third quarter if all goes according to plan.

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Tags business issuestelecommunicationalcatel-lucentfinancial resultsrestructuringMergers and acquisitions

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