Alcatel-Lucent Q1 rises to $4.2 billion on strong North America, VDSL2 sales

Alcatel-Lucent (NYSE: ALU) may be challenged by cash flow issues, but strong sales in North America and momentum for its VDSL2 products drove up its Q1 revenue 0.6 percent to €3.23 billion ($4.2 billion).

The vendor's North America sales rose 16 percent, or €1.55 billion ($2.01 billion), which offset decreases of 10.1 percent to €771 million ($1 billion) in Europe.

It also narrowed its operating losses to €202 million ($263 million) from a €290 million ($378 million) operating loss in Q1 2012.  

Here's a breakdown of their key units:

  • IP: Driven by growth in the Americas and APAC regions, the IP division's revenues rose 6.3 percent to €493 million ($642 million). It also saw continued momentum for its new core router product as it won two new 7950 XRS customers, including Belgacom and the University of Pittsburgh Medical Center (UPMC), for a total of 8 wins. The product is being trialed by 20 potential customers. In addition to the new core router, Alcatel-Lucent launched Nuage Networks, a venture focused on software defined networking (SDN) solutions, which is being trialed by SFR, UK cloud service provider Exponential-e, Canada's TELUS and US healthcare provider, UPMC. "As I look at the overall revenue contribution of IPD to the total group, it's approximately 16%, which is up 200 basis points from a year ago and 100 basis points from the fourth quarter, so continued growth in IPD, which you know carries an above average margin for the overall corporation," said Paul Tufano, CFO of Alcatel-Lucent, during the earnings call.
  • Optics: The optics division's revenues fell by 15.6 percent to €342 million ($445 million), a factor it attributes to a continued decline in legacy equipment partly offset by growth in WDM in Europe and Asia Pacific. A key area of growth is its 1830 Photonic Service Switch. The vendor said the 1830 "continues to grow as a percentage of optical revenues, reaching 36 percent in the first quarter, as sales grew at a high double-digit rate compared to the year-ago quarter." Another major area of growth is 100G. During the quarter, 100G shipments rose 19 percent. Tufano said that "1830 overall growth has been almost double from a year ago at this time, adding that "the amount that were shipping on the 100 Gigabit line card, which is are leading-edge line card, is going up from 11% or 7% in the first quarter '12 to about 19% today."
  • Fixed Networks: Due to the ongoing adoption of its copper-based VDSL2 and vectoring products, the vendor's fixed network division's revenues rose by 8.6 percent to €405 million ($527 million). During the quarter it shipped its 1 millionth VDSL2 vectored line, in addition to 40 trials.  

A key initiative that new CEO Michel Combes will focus on in Q2 and the rest of the year will be a review of its business units. He said during the earnings call that he will reveal the elements of that plan this summer.

Shares of Alcatel-Lucent on Friday were listed at $1.37, down 0.03, or 2.14 percent in morning trading on the New York Stock Exchange.

For more:
- see the earnings release
- here's the earnings call transcript (sub req.)

Earnings roundup: Wireline telecom earnings in the first quarter of 2013

Special report: Bonding telcos' love affair with copper through VDSL2

Related articles:
Alcatel-Lucent's new CEO faces cash flow challenge
Seaborn Networks establishes gateways with Equinix and Telx in US, Brazil
Alcatel-Lucent reaches 1 million VDSL2 vectoring shipments