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Alcatel-Lucent reports write-off headache

Costly woes continue

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Alcatel-Lucent has admitted its outlook is dire after it disclosed it would be writing down $4.3bn of assets.

The French-American networking group, which has been undergoing a painful cost-cutting strategy to slash 4,000 global jobs in an attempt to pull the company out of the red, said in a statement that, excluding the writedown, Alcatel-Lucent made €443m loss for the year ended December 31. That compared to a €522m profit in 2006.

Meanwhile group revenue dropped four per cent from €18.25bn to €17.79bn year-on-year.

The firm said it was forced to carry out an impairment test for concerned shareholders after its market value fell by $20bn following the 2006 merger of Alcatel and Lucent.

The Alcatel-Lucent board has also scrapped dividend payments for the last year after notching up a record net loss of €3.5bn for 2007.

The company's CEO, Patricia Russo, said that despite "difficult market conditions" and an incredibly bumpy transitional period, the wireline, enterprise and services businesses had remained solid. But she admitted that a lack of revenues in mobile activities had "severely impacted profitability".

She said for the year ahead the group predicts revenues in the global equipment and services market to be relatively flat at a constant euro/dollar exchange rate and slightly down at the current rate.

The firm also forecast an adjusted operating margin of between 2.5 and five per cent for 2008.

Despite the gloomy outlook and huge drop in market value, Alcatel-Lucent saw fourth quarter group sales rise 18 per cent to €5.23bn in the three months ended 31 December. It made a net loss of €2.58bn including €2.52bn of exceptional charges.

Alcatel-Lucent's Q4 and full-year results can be viewed here. ®

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