Telecom Operators’ Slow Spending On Networks Hit Alcatel-Lucent

Alcatel-LucentA new report reveals that slow spending by telecom operators has largely hit Alcatel-Lucent (ALUA. PA), which is a Franco-American group making Telecom gears. It has been found that the group has faced a fall in its profitability due to the slower spending of telecoms.

According to the report, the group has realized a big fall in its revenue and profitability as a result of telecom operators’ less spending. The figures have been noticed to be slipped down by 13% with overall revenue of 15.33 billion, as per the data revealed by the group on Friday.

The report has found that the Franco-American group Alcatel-Lucent was in huge competition with Sweden's Ericsson and China's Huawei and was expecting good amount of revenues this year. However, its profit for the fourth quarter has dishearteningly been noticed to be fallen by nearly 20%.

It is being said that quarterly profit has been noted to 316 million euros at this time, while 610 million euros were being expected by the group. Alcatel-Lucent has also told the reporters that it had realized a strong first half, but a weak fourth quarter is the only consequence of cut in spending by telecom operators on their networks in reaction to macroeconomic uncertainty.

"Although visibility remains limited, our aim for 2012 is to achieve an adjusted operating margin higher than the level reached in 2011 and reach a strong positive net cash position at the end of 2012", added the group.

As per the report, the group Alcatel-Lucent would continue to face cash burn, which is a problem for long-term. This is because it had ended up last year realizing negative free cash flow of nearly 458 million euros along with a debt position of 40 million.