AlcaLu Reports Q1

Sunday, 08 May 2011 18:26

Alcatel-Lucent continues its momentum into 2011 with a strong start to the year: 15% top line year-over-year growth in Q1’11 & positive adjusted operating profit. KEY NUMBERS FOR THE FIRST QUARTER 2011 Revenues of Euro 3.740 billion, up 15.2% year-over-year Adjusted gross profit of Euro 1.354 billion or 36.2% of revenues Adjusted operating income of Euro 13 million or 0.3% of revenues Operating cash flow of Euro 169 million Net (debt)/cash of Euro 106 million as of March 31, 2011 EXECUTIVE COMMENTARY Ben Verwaayen, CEO, commented: "We have started this year the way we ended the last, increasing growth, profit and global strength, and to do so in the first quarter is particularly pleasing. He added: "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." KEY HIGHLIGHTS First quarter revenue increased 15.2% year-over-year and decreased 23.1% sequentially to Euro 3.740 billion. At constant currency exchange rates and perimeter, revenue increased 13.9% year-over-year and decreased 21.6% sequentially. Networks saw a strong year-over-year increase in revenue with all divisions growing.IP revenues maintained a very strong pace of growth with an increase of more than 20% as did wireless with an increase close to 34% driven by 3G defined as the sum of WCDMA & 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 6%.Services revenues grew at a low single digit rate with strong double digit growth for Network & System integration.From a geographic standpoint, growth in North America accelerated again this quarter at 40% year-over-year, 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 1% year-over-year with Eastern Europe and Western Europe declining at roughly the same pace. Adjusted operating income of Euro 13 million or 0.3% of revenue. Gross margin came in at 36.2% of revenue for the quarter, compared to 32.6% in the year ago quarter and 36.2% in the fourth quarter 2010. The year-over-year increase in gross margin was driven by a very good geographical and product mix. The sequential stability in the gross margin results from a decrease in volumes compensated by a better geographical & product mix. Operating expenses increased 7.0% year-over-year on a reported basis and adjusted for constant currency, the increase is 5.7% 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. On a sequential basis, operating expenses decreased by 1.8% as reported and by 1.5% at constant currency reflecting a decrease in R&D. Reported net loss (group share) of Euro (10) million or Euro (0.00) per share. This includes a one-time gain of Euro 69 million pre-tax and after tax related to an amendment of the US management pension plan. Purchase Price Adjustments amounted to Euro (68) million pre-tax and to Euro (42) million after tax. Alcatel-Lucent (NYSE: ALU)