Alcatel-Lucent Q2: IP, wireless carry the day with strong results

Solid earnings in Alcatel-Lucent's (NYSE: ALU) IP and wireless segments and strong growth in North America helped to partially offset a decline in fixed access revenues for the second quarter of 2010, the operator reports. Alcatel-Lucent's overall revenues were down 2.4 percent compared to last year, at EUR3.8 billion.

However, CEO Ben Verwaayen maintained the company is optimistic about the remainder of the year. Revenues rose 17.4 percent sequentially and ALU saw encouraging gains in its gross margin.

"Revenues for the quarter reflect the on-going and expected overall improvement in market conditions and the good traction of our product portfolio," Verwaayen said in a release. "This is notably highlighted by the good performance in IP and wireless and, from a geographic standpoint, by strong growth in North America."

The company's adjusted gross margin rose three percentage points, coming in at 36.1 percent of revenue for the quarter compared to 33.1 percent in Q1 2009--an encouraging indicator for Alcatel-Lucent's profits according to Marketwatch.

Second quarter results continued to reflect ongoing industry trends, with wireline revenues declining slowly but steadily while demand for next-generation solutions and wireless offerings (in ALU's case, its WCDMA business, particularly in North America) rose reliably. Alcatel-Lucent's optics division saw revenues decline 14.6 percent to EUR622 million compared to the same period last year, while earnings in its wireline division likewise dipped 13.7 percent year-on-year to EUR366 million.

However, the company's IP division saw an 11.2 percent increase in revenue to EUR318 million, and particularly strong growth of 30 percent in its IP/MPLS segment, particularly in North America and EMEA.

"If you look to IP, the journey that the industry is making is full IP. End-to-end IP," Verwaayen said during a conference discussing the results. "Doesn't matter what service, doesn't matter what screen, I want my service capability wherever I want, in the format that I want... IP is no longer a technology as such, it's the underlying technology throughout."

Its wireless division grew revenues by 5 percent to EUR1.02 billion, with its WCDMA business the key driver, climbing 50 percent year over year.

Alcatel-Lucent maintained its outlook for the rest of 2010.

For more:
- see the earnings release
- Marketwatch has this story

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