Alcatel-Lucent announced plans for more cost reductions after sales weakened in the third quarter. The network equipment maker reported sales down 6.8 percent from a year ago to EUR 3.797 billion. Excluding exchange rate effects, sales fell 0.7 percent. The company said the weak economy and hesitant spending by customers will require a quick reduction in costs, especially in Europe. For 2012, it targets EUR 200 million in savings in fixed costs, mainly in SG&A, and a EUR 300 million reduction in variable costs for project delivery. Alcatel-Lucent said fourth-quarter sales will be weaker than expected, and the company cut its outlook for the adjusted operating margin this year to around 4 percent, from an earlier outlook for over 5 percent. Third-quarter adjusted operating profit rose to EUR 173 million, or 4.6 percent of sales, from EUR 61 million year earlier. This was helped by a one-time gain of EUR 28 million from a new licensing agreement with TCL as well as a higher gross margin and lower operating costs. Net profit amounted to EUR 194 million or EUR 0.08 per share, up from EUR 25 million or 1 cent a share a year ago.
At the main networks division, sales fell 7.1 percent from a year ago to EUR 2.285 billion, while operating profit improved to EUR 70 million from EUR 31 million. The wireless business remained strong in the Americas, and the company also saw growth in IP/MPLS routers. However the submarine and terrestrial fibre businesses saw lower sales, and revenues dropped sharply at the IP DSLAM activities. At the software and services division, revenues fell 4.7 percent to EUR 1.10 billion, while operating profit improved to EUR 55 million from EUR 25 million a year ago. Enterprise was the only division to report higher sales, up 8.9 percent to EUR 319 million, with operating profit up to EUR 29 million from EUR 18 million a year earlier. Alcatel-Lucent said it expects to complete the sale of the Genesys unit late this year or early in 2012.
