Despite second quarter sales rising from €3.2 billion to €3.5 billion, Alcatel’s “slower than expected business mix improvement” was blamed for failing to translate this into profit.
Alcatel also said that it could no longer uphold a promise to exceed last year’s 3.9% adjusted operating margin. The company’s share price dropped more than 13% at €0.98 in morning trading.
Equipment vendor sales have been hit by declining carrier budgets and the difficult economic situation in the Eurozone. Rival Nokia Siemens Networks is cutting jobs as it engages in a business restructuring plan and Ericsson has reported falling margins and revenues.
Competition from Chinese rivals Huawei and ZTE is also forcing European vendors to cut their prices, but they too have not been immune to poor market conditions. ZTE is facing a drop in half year profits by up to 80% with its shares prices at their lowest level in three years.
Further details of Alcatel-Lucent’s business performance and full year guidance will be revealed during its second quarter earnings presentation on July 26.
