Alcatel-Lucent core networking revenues jump 6.9 percent to $1.8B on strong IP routing, transport sales

Alcatel-Lucent (NYSE: ALU) reported that its first-quarter core networking revenue rose 6.9 percent to $1.8 billion due to strong IP routing and transport equipment results.

IP routing revenues were $756 million, up 16.4 percent year-over-year from the first quarter of 2013. All regions, particularly Asia-Pacific, showed double-digit growth, as sales benefitted from the continued movement to all-IP networks.

One of the key engines of the IP routing revenue growth was its 7950 XRS IP Core router, which registered four new wins in the first quarter, including Elisa in Finland and customers in the cable sector, bringing it to a total of 24 wins to date.

In addition to the routing platform, Alcatel-Lucent's Nuage Networks software subsidiary won two contracts, including one with French cloud provider Numergy. To date, Nuage has sold its solution to five customers and it has over 30 trials, including one with NTT Communications.

Meanwhile, IP Transport reached $454 million in the first quarter of 2014, up 8.6 percent year-on-year. Within IP Transport, terrestrial optics recorded its first quarter of year-over-year growth since 2011.
Driven by 26 new customer wins, the vendor also saw gains in the WDM segment with the 1830 Photonic Service Switch (PSS), which represented 44 percent of terrestrial optical product revenues in the quarter, up 810 basis points year-on-year.

The vendor also continued to see momentum with 100G and 400G. Its 100G shipments represented 30 percent of total WDM line cards shipments in the first quarter of 2014 compared to 19 percent in the first quarter of 2013, while it is conducting 400G trials with large telcos like Telekom Austria.

Despite these gains, it reported losses in its IP Platforms and Access division. IP platform revenues decreased 6.9 percent year-on-year to $481 million in Q1 2014. Growth in key platforms, namely IMS (VoLTE), SDM (Subscriber Data Management) and Customer Experience, was more than offset by declines in legacy platforms and by the impact from the portfolio rationalization done in 2013.

Sales at the Access division were down 4.2 percent to $2.16 billion, mainly due to a 51 percent decline in managed services revenue after the company decided to exit some unprofitable contracts.

From an overall financial perspective, revenues from continuing operations were up 0.3 percent year-on-year at constant exchange rates to $4.08 billion. This excludes the Enterprise division up for sale.

Shares of Alcatel-Lucent were listed at $3.75, up 3 cents or 0.81 percent, in Friday morning trading on the New York Stock Exchange.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the first quarter of 2014

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