Alcatel reduces losses and eyes return to profit

French telecommunications equipment manufacturer Alcatel reported reduced losses for the third quarter yesterday, and said there are indications it will soon return to profitability.

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The company reported a net loss for the quarter of €284m to 30 September, compared to a net loss of €1.35bn for the same period last year. Net sales for the quarter slipped to €3.04bn from €3.51bn.

Sales of fixed communications equipment in the quarter slipped 15.8% year on year to €1.34bn, while mobile communications equipment sales dropped 16.2% to €815m. For these comparisons, Alcatel restated its figures for 2002 to take account of the sale of its Optronics division.

Investment in research and development in third-generation mobile communications, applications software and internet Protocol technologies is now paying off in the form of new contracts, but the company continues to lose money on mobile phones and optics.

The best-performing business sector was private communications, where sales for the quarter slipped 6.4% year on year to €975m. The company saw an increase in demand for its IP/PBX (private branch exchange) equipment in Europe, but this and other increases were offset by a decline in revenue from its space communications segment.

Western Europe accounted for the bulk of Alcatel's sales, at 42%, with other European countries taking 7%, North America 18%, Asia 17% and the rest of the world 16%.

Alcatel said it expected fourth-quarter sales to rise 20% compared with the third quarter, enabling it to break even, excluding goodwill and nonrecurring charges. For the full year, it expected a net loss roughly equivalent to goodwill and nonrecurring charges.

Peter Sayer writes for IDG News Service