Alcatel-Lucent reports switch to loss, but shares surge

7th February 2013, Comments 0 comments

Telecommunications equipment group Alcatel-Lucent fell back into a net loss last year owing to write-downs and said on Thursday its chief executive would not stand for re-appointment.

The board recommended that no dividend be paid for 2012.

But the price of shares in the company surged by 9.65 percent to 1.42 euros in early trading.

Traders welcomed the clear action taken with the write-downs, the prospect of a change in chief executive, a recovery of the firm's brands and firmer prospects for orders.

The group, which is recovering from several big setbacks since the merger of French group Alcatel with US business Lucent, reported a net loss for 2012 of 1.3 billion euros ($1.76 billion) from a net profit of slightly more than 1.0 billion euros in 2011.

Chief executive Ben Verwaayen, who took his post in 2008 and whose term ends this year, had decided not to stand again, a statement said.

He said that this had been a "difficult decision" but that the time had come for the board to find a new leader to take the company into success.

Verwaayen will leave his functions as an administrator on May 7, the date of a shareholders' meeting, and will hand over his management role as soon as his successor has been found.

The company said that its loss for 2012 reflected big asset write downs.

The group was obliged under accounting principles to take a charge of 1.4 billion euros for writing down the value of the goodwill factor of companies acquired. This reflects the difference between the purchase price and the book value of the assets concerned if they do not yield a return in line with the acquisition cost.

However, Alcatel-Lucent said that otherwise its results for 2012 were in line with objectives and said that it was ahead of its restructuring programme, having achieved savings of 650 million euros.

Sales fell by 5.7 percent to 14.4 billion euros but the firm said that it had noted a recovery towards the end of the year.

In the fourth quarter sales had risen by 13.8 percent from the level in the third quarter to 4.0 billion euros, generating a free cash flow of 355 million euros and an adjusted operating margin of 2.9 percent.

The group, which faces deep financial problems, obtained in January an extension of its bank credit from 1.6 billion to 2.0 billion euros. The company said that this had enabled it to extend the maturity of its debt, stabilise its balance sheet and ensure resources to complete the restructuring programme.

The group is engaged in a vast programme, announced in July, to reduce costs by 1.25 billion euros by the end of 2013. Under the plan, 5,500 jobs will be cut around the world from a workforce of 76,000.

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© 2013 AFP

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