Cost cutting and higher sales driving Alcatel profits

28 Oct 2004

Paris-based Alcatel reported its third consecutive quarterly profit, thanks to a string of cost-cutting and a rise in orders from telecoms operators for equipment to upgrade their fixed line networks. In the three months to 30 September, the company recorded net income of EUR84 million, from a net loss of EUR284 million a year ago, thanks in part to an 11% rise in sales to EUR3.04 billion. Last year’s loss included EUR214 million-worth of restructuring costs. Its CEO Serge Tchuruk has cut more than 40,000 jobs in an effort to staunch losses which had dogged the vendor for over three years. Alcatel’s strong performance surprised the analyst community which had predicted a 9.1% rise in turnover to EUR3 billion – based on the median estimate of 25 analysts. The company has restated its 2003 revenues and operating profit to reflect the sale of its battery unit and the creation of joint ventures for its mobile phone and fibre-optic businesses. Commenting on the results, Mr Tchuruk said that ‘the third quarter showed a strong rebound of our mobile communications sales’, while the previously declining wireline market had now ‘reached a stage where profitability is back’.