Alcatel-Lucent (NYSE: ALU) recovery continues with rise in Q4 revenue and a solid outlook

Alcatel-Lucent (NYSE: ALU) CEO Ben Verwaayen's three-year turnaround continues to take hold as the vendor showed positive fourth-quarter profit and a forecast that indicates growth and profitability.  

For the fourth quarter, Alcatel-Lucent posted a net profit of $462 million, up from $62.5 million in Q4 2009. According to a Bloomberg report, the results boosted Alcatel-Lucent's shares to their highest levels in 18 months.

During a call with reporters on Thursday, Verwaayen, who is credited with bringing BT back to profitability as the telco's CEO, said that "We had the best profits this quarter since the merger and it's a clear indication that we are on our way to becoming a normal company going into 2011."

Alcatel-Lucent's total Q4 2010 revenue came in at $6.6 billion, up 22.6 percent from Q4 2009.

All of the divisions in its network business, including IP, Optics and Wireline reported growth in the fourth quarter:

  • IP Division: Driven by service provider demand for an all-IP transformation and mobile backhaul, IP revenues increased 58.8 percent to $687 million as IP/MPLS service router revenues doubled from Q4 2009. One of the highlights in Alcatel-Lucent's IP Division in Q4 was initial revenues for its new 100 GigE Service Router interface that was deployed with eight service providers.
  • Optics Division: Led by the terrestrial segment, Optics division revenue were $1.1 billion, an increase of 6.8 percent from the year-ago quarter. The star performer in the Optics division was its terrestrial business with nearly 50 percent growth in the WDM segment, but from a full-year perspective remained flat. Also on the rise in the fourth quarter were sales of its integrated IP/optical 100G solutions. Contributing to the growth of the integrated IP/optical 100G solutions were Portugal Telecom's and 360networks' respective deployments of the platforms inside their respective networks. Portugal Telecom and 360networks Alcatel-Lucent's submarine business, however, posted double-digit decline for 2010 leading to a seven percent revenue decline in 2010 total optics revenue.
  • Wireline Division: Alcatel-Lucent's Q4 wireline division revenues were $660 million, as year-over-year growth picked up from -13 percent in the first three quarters to a strong 22.6 percent in the fourth quarter.As expected, legacy TDM switching continued decline as sales of broadband access and IMS core rose. Driven by strong sales of its GPON sales in Asia-Pacific and IP-DSLAMs in the EMEA region, Alcatel-Lucent's overall broadband access division (ADSL, VDSL, GPON and home networking) increased for the second consecutive quarter. Likewise, IMS core networking revenues also increased very strongly. All of this growth wasn't enough to prevent full-year 4.4 revenue decline in its wireline division as a single-digit increase in overall broadband access was more than offset by declines in legacy switching and next-gen core networking.

As it looks ahead into 2011, Alcatel-Lucent said it is planning for an adjusted operating margin above 5 percent of 2011 sales.

For more:
- see the earnings release
- Bloomberg has this article
- Reuters has this article
- see FierceTelecom's Q4 earnings summary

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