Alcatel shares fall despite profit rise

29th July 2004, Comments 0 comments

PARIS, July 29 (AFP) - Alcatel shares fell on Thursday after the French telecom equipment maker forecast little growth in third-quarter share earnings despite a better-than-expected rise in second-quarter net profit, to EUR 23 million (USD 27.7 million).

PARIS, July 29 (AFP) - Alcatel shares fell on Thursday after the French telecom equipment maker forecast little growth in third-quarter share earnings despite a better-than-expected rise in second-quarter net profit, to EUR 23 million (USD 27.7 million).

Compared with a loss of EUR 675 million in the corresponding period of 2003, the result followed earnings of EUR 134 million in the first quarter and confirmed the group's return to profit after a major crisis last year.

Second-quarter sales were EUR 3.078 billion, an increase of 3.7 percent of the same period last year.

On a constant exchange rate basis, the sales figure was up 7.2 percent, Alcatel said in a statement.

"The figures are better than we expected and above market forecasts, except for turnover," said Fortis Bank analyst Stephane Houri.

Aurel Leven's analyst Antoine Joly said the turnover figure was explained by a lag in mobile phone orders, but noted "the good improvement in gross margin and an upturn in activity by the fixed telecoms sector".

In Thursday's statement Alcatel said the latest results confirmed its prediction of a healthy growth in sales for 2004. Sales growth for the year would be "high in the single figures", it said.

But while it predicted growth of more than 10 percent in the third quarter, at constant exchange rates, it also told shareholders they could expect earnings per share "close" to those of the second quarter.

This explained the sharp drop in Alcatel's share price, which fell 3.44 percent to EUR 10.64 in mid-morning trading in Paris, Houri said.

A broker, who did not give his name, said "investors were disappointed by the sales figures and the forecasts".

But he described the fall in share price as "a bit excessive, because the results are good, with a big increase in available cash".

© AFP

Subject: French news

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