Alcatel-Lucent makes a loss

Chief executive predicts stronger performance in second half of year

Alcatel-Lucent: Customer base under attack

Communcations giant Alcatel-Lucent has reported a large quarterly loss following low sales of wireless units and stronger sales in regions of poor profitability.

The company, formed last year by a merger of Alcatel and Lucent,made a net loss of €147m (£99.25m) in the period, compared with the combined profit of €302m (£204m) they would have made in 2006.

Sales were €4.33bn (£2.92bn), a drop of €16m (£10.8m) from the €4.49bn (£3.03bn) of hypothetical revenue if the firms had been combined in the same quarter last year.

'In the second quarter , the gross margin was lower than we would have liked and was negatively impacted by continued significant investments in key markets, an unfavorable product and geographic mix as well as some impact from product related transition costs,' said Alcatel- Lucent chief executive Patricia Russo.

The company reduced costs during the period by cutting 1,900 jobs. The plan is to make €600m (£405m) pre-tax reductions in operating costs over the year, cutting 3,800 jobs overall in 2007, 30 per cent of the 12,500 it will shed over three years.

Alcatel-Lucent has lost out to rivals during the merger but the firm will recover in the second half of the year, says Russo.

'We anticipate sequential revenue growth as the year progresses, which implies a strong ramp-up in the second half 2007,' she said.