Alcatel-Lucent (NYSE: ALU) Q3 profit buoyed by IP and wireless growth

Alcatel-Lucent's (NYSE: ALU) CEO and President Ben Verwaayen's plan to turn the company towards a path of profitability certainly were on display in Q3 2010.

During the third quarter, Alcatel-Lucent reported its first profitable quarter in 2010. Aided by a one-time tax benefit related to pension plans in addition to an increase in sales, the vendor reported a profit of $35.3 million, compared with a loss of $257 million in Q3 09.

Overall, Alcatel-Lucent reported $5.75 billion in Q3 revenues, a 10.5 percent increase from the $5.21 billion it reported in Q3 09. Alcatel-Lucent reported that it achieved double-digit growth in the North American market.

A key contributor to the vendor's positive Q3 results were a number of high profile customer wins, including a $4 billion deal with Verizon Wireless and $1.66 billion worth of deals for wireless and wireline equipment deals with China Mobile, China Unicom and China Telecom.

Verwaayen, which has previously cited the wireless industry and the China market as a major growth engines for the company, said he sees the new deals with Verizon and the trio of Chinese service providers as proof that his growth vision is taking shape. "I think this is a significant turning point in the transformation of the company," Alcatel-Lucent CEO Ben Verwaayen told the New York Times. "We are experiencing good demand for our products."

On a segment basis, Alcatel-Lucent saw particularly strong growth in its IP division and Networks divisions.

During the third quarter, Alcatel-Lucent's IP division revenues were $510 million, with year-over-year growth rising 11 percent in Q2 2010 to 29.3 percent in Q3 2010, driven by 30 percent growth in IP/MPLS service routing.   

Just the same, the vendor's Networks segment increased 10.2 percent over the 3.06 billion in the year-ago quarter and an increase of 6.7 percent compared to $3.2 billion in the second quarter 2010.

Of course, there were also losses during the quarter.

Alcatel-Lucent's Optics division, for one, declined 7.8 percent from Q3 2009 to $908 million as new growth in terrestrial optical systems was offset by a decline its submarine optical business. In particular, Alcatel-Lucent reported strong recovery in its WDM segment with banner wins from the likes of Korea's SK Telecom, which selected its packet optical transport solution to upgrade its mobile backhaul network.

Like its optical division, Alcatel-Lucent's wireline revenues declined 2.0 percent to $552 million as spending on legacy TDM switching continued to decline in the third quarter. However, the decline in TDM switching sales were offset by increases in broadband access sales--including ADSL, VDSL, GPON and home networking gear.

During the quarter, Alcatel-Lucent signed a number of banner U.S. and international carriers for its products. Alcatel-Lucent was named as a supplier to EPB Fiber of Chattanooga's 1 Gbps broadband network, while Denmark's TDC announced it will deploy its Intelligent Services Access Manager (ISAM) platform to deliver copper and fiber-based last mile services.

For more:
- see the earnings release
- here's FierceWireless' take
- see this New York Times article

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