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The Honolulu Advertiser
Posted on: Saturday, February 9, 2008

After 4th-quarter loss, telecom equipment giant sees grim 2008

By Angela Charlton
Associated Press

PARIS — Telecommunication equipment titan Alcatel-Lucent sees global economic woes causing it uncertainty in 2008 after the newly merged company survived a choppy 2007, reporting a fourth-quarter loss yesterday and scrapping its dividend for last year.

The Franco-American company had some good news, however: Sales rose, and it swung to an operating profit in the fourth quarter.

Analysts said the results were slightly better than expected and that the company's grim outlook reflects the difficult market overall.

Rivals Telefon AB LM Ericsson and Nokia Siemens Networks have already given downbeat forecasts for the market in 2008 amid falling orders. Shares in all three companies rose initially on Alcatel-Lucent's earnings report.

Alcatel-Lucent reported a net loss of $3.76 billion in the quarter ending Dec. 31 and $5.12 billion for the year, as it booked $3.71 billion in write-downs in the quarter related to the reduced value of assets inherited from Lucent Technologies Inc.

Revenue for the fourth quarter rose to $7.61 billion, up 18 percent from the same period in 2006 and above analysts' forecasts.

Operating profit amounted to $441 million, compared with a loss of about $4 million a year earlier, the company reported. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company's basic business activity.

The fourth quarter normally sees strong revenues for telecommunications equipment makers, and the latest figures were up — but from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, N.J.

Alcatel-Lucent suspended its dividend for 2007, citing uncertainty for this year.

"While the long-term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months," CEO Patricia Russo said in a statement.