Alcatel-Lucent said it is still dealing with lower carrier spending in the U.S. but still managed to boost its overall revenue in the first quarter and improve its gross margins on higher sales of software products.
Nokia's integration of Alcatel-Lucent following the proposed acquisition of its rival will be difficult and messy. Some significant rewards will take many years to achieve, if ever. However, very large research and development demands with economies of scale and scope in 4G, 5G and with fixed-mobile network convergence make this kind of transaction inevitable and indispensable.
Nokia's $16.6 billion deal to acquire Alcatel-Lucent would bring together two large network vendors that have each gone through major mergers of their own that have been difficult, to say the least. Although the companies' leaders are defending the deal, some analysts are skeptical that the firms can pull off such a merger without major integration headaches.
Nokia said it is to buy Alcatel-Lucent in a deal that values the France-based company at €15.6 billion ($16.6 billion) and creates a new European powerhouse in the telecoms equipment market.
Alcatel-Lucent posted higher profit in the fourth quarter of 2014 and vowed to continue its march into profitability in 2015. However, like its larger peer Ericsson, Alcatel-Lucent was stung in the fourth quarter by falling sales in North America, which is especially problematic since Alcatel-Lucent relies heavily on U.S. carriers for its overall sales.
Alcatel-Lucent's Shift Plan restructuring program may have peaked in terms of its effectiveness to deliver cost savings an analyst warned, as the company revealed fourth-quarter and full-year 2014 earnings that were below consensus estimates.
Alcatel-Lucent has set the next stage of CEO Michel Combes' Shift Plan with a focus on diversifying its customer base by selling more of its portfolio of edge and core routers to large enterprises and content providers.
Alcatel-Lucent has appointed Willem Hendrickx as president of its Europe, Middle East and Africa (EMEA) operations with effect from Jan. 1, 2015, replacing Luis Martinez Amago who will be taking up a new position at the equipment manufacturer to be announced in due course.
Alcatel-Lucent CEO Michel Combes said that the vendor is "back in the game" in terms of competing with its top rivals and that the company is looking, like other gear makers, for non-carriers customers. After skirting with financial disaster and undergoing a massive restructuring, Combes seemed to be brimming with confidence about Alcatel-Lucent's prospects.
Alcatel-Lucent has finalized the sale of its cybersecurity and security services business to Thales for an undisclosed amount, another move in its effort to shed non-core assets.