Alcatel-Lucent Reports 15 Percent Profit in Q1 2011

Alcatel-Lucent has reported that its Q1 revenues increased 15.2 per cent year-over-year and decreased 23.1% sequentially to Euro 3.740 bn .  Networks saw a strong year-over-year increase in revenue with all divisions growing. IP revenues maintained a strong pace of growth with an increase of more than 20 percent, as did wireless with an increase close to 34 percent driven by 3G defined as the sum of WCDMA and CDMA EV-DO and 4G technologies.



The optics division posted sales growth both in submarine and terrestrial transmission and wireline benefited from good growth in GPON and IPDSLAM. Applications revenues posted a year-over-year high single digit increase with Networks applications growing at a double digit rate and Enterprise applications increasing close to six per cent. Services revenues grew at a low single digit rate with strong double digit growth for Network and System integration.



From a geographic standpoint, growth in North America accelerated again this quarter at 40 percent year-over-year, while the rest of world grew at a low double digit rate driven by Brazil and Mexico. Asia Pacific grew slightly thanks to China, somewhat compensated by lower sales in the rest of the region and Europe declined one per cent year-over-year, with Eastern Europe and Western Europe declining at roughly the same pace.



Adjusted operating income stood at Euro 13 million or 0.3 per cent of revenue. Gross margin came in at 36.2 percent of revenue for the quarter, compared to 32.6 percent in the year ago quarter and 36.2 per cent in the fourth quarter 2010. Operating expenses increased 7.0 percent year-over-year on a reported basis and adjusted for constant currency, the increase is 5.7 percent year-over-year primarily driven by an increase in R&D spending related to new product development in IP and wireless and an increase in SG&A spending related to seasonal accruals activity.



A favourable geographic and product mix impacted positively our gross margin while actions on fixed costs have been taken which will drive further efficiency gains during the course of the year. We improved our free cash flow by more than Euro 200 million compared to the year ago quarter”,  said Ben Verwaayen, CEO, Alcatel-Lucent.



Market momentum remains robust, driven by demand for more capacity and service delivery capabilities in most geographies.  While we are facing some difficulties with our supply chain, we believe those challenges will have a limited impact on our business performance thanks to rapid actions taken. With a strong start to the year, we are reaffirming our full-year outlook to grow faster than our addressable market with an adjusted operating margin above five per cent of our 2011 sales”.



 By Team