Alcatel-Lucent eyes turnaround target as costs fall

Telecom equipment maker Alcatel-Lucent pledged to lift profitability again this year through cost cuts after six straight quarters of gross margin improvements; and also plans to list its undersea cables business in the second half.

Chief executive Michel Combes today expressed confidence that the company would deliver on the central pledge of his turnaround plan which started in June 2013 by achieving positive free cash flow by the end of this year.

Fourth-quarter sales fell 6 per cent to €3.68 billion, in line with expectations. Operating profit doubled from a year earlier to reach €284 million but was still about 10 per cent lower than forecasts as the pace of cost cuts eased from the previous three months.

A slowdown in spending by big US telecoms customers Verizon and AT&T that have largely finished building 4G mobile networks hurt revenues. Internet equipment, a smaller but promising business at the heart of Combes’s strategy, continued to grow.

– Reuters