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Alcatel in return to health shocker

Welcome boost for struggling telco kit sector

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Alcatel's results have rebounded with strong quarterly sales figures.

In a trading update issued today, Alcatel said its sales figures for Q4 2002 were more than 25 per cent up on those on its previous quarter. Sustained sales of broadband equipment and mobile infrastructure, along with seasonal factors, are responsible for the welcome gains, the French telecoms equipment maker reckons.

The company predicts Q4 profits will be around break even on revenues of around €4.1 billion, even after accounting for reserve inventories of €150 million. It reports its cost cutting restructuring plans, announced after previous disappointing figures, are well on track with a prediction it should be cash positive when its full Q4 results are announced on February 4.

Alcatel's cheery prognosis is a welcome sign for the beleaguered telecoms equipment market as a whole, which has been in the doldrums for the best part of two years. Business failures and the reigning in of spending by surviving carriers, coupled with a more general IT spending slowdown, have hit firm like Alcatel, Lucent, Nortel and (to a slightly lesser extent) Cisco hard in recent times.

However it's too early to predict that the market is on the up. Alcatel's results are best considered as a welcome sign of the first green shoots of recovery. ®

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