Alcatel-Lucent's Q1 results hurt by lower telecom service provider sales

Alcatel-Lucent (NYSE:ALU) is feeling the sting of slow service provider sales in both North America and Europe with major declines particularly in both its optics and wireline units.

In Q1 2012, the France-based global telecommunications vendor reported that revenue was down 12.3 percent year-over-year and decreased 22.7 percent sequentially to 4.24 million, down from $4.83 billion in Q1 2011.

The vendor reported a net profit of $526 million, up from a $13.2 million net loss in the same period a year ago. Alcatel-Lucent benefited though from its $871 million sale of its conferencing center business Genesys to Permira last October. It also reported an operating loss of $292 million after reporting an operating profit of $5.3 million in the year-ago quarter.

"We had a slow start in a volatile environment because of lower product volumes and mix," CEO Ben Verwaayen said on the company's earnings conference call, according to a Reuters report. "The European debt crisis is all around us and that has an impact. It's a serious issue to factor in and a good reason to be cautious."

Here's a breakdown of the performance of the company's key wireline-related units:

  • IP Division: The IP Division continues to be a growth engine for Alcatel-Lucent, growing 23.5 percent year-over-year to $571 million. From a regional perspective, the vendor saw growth in the APAC and Americas regions, both growing over 30 percent year-over-year, a factor it attributes to service providers migrating their networks from TDM to IP, with particular investments in mobile backhaul and 100 Gigabit Ethernet (GigE). It said it has over 25 customers that have deployed 100 GigE on their service routers. 
  • Optical Division: Optics Division revenues were $648 million, down 25.2 percent from the year-ago quarter, driven by double-digit declines in the vendor's terrestrial and submarine businesses. Its terrestrial optics business saw year-over-year decline in all of the regions it serves, while the submarine business declined following a full year of growth. One bright spot in the optics portfolio was that it signed over 60 customers for its 100G optics systems. 
  • Wireline Division: Alcatel-Lucent's Wireline Division revenues declined 8.7 percent from Q1 2011, to $374 million. Not surprisingly, the decline in the Wireline division was once again driven by its legacy businesses, which was partially offset by strong growth in last fiber access equipment such as GPON. Driven by GPON growth in the APAC and Americas regions fiber access portfolio growth continued to show year-over-year strength in all regions, growing in excess of 100 percent. During the first quarter, the vendor won 15 new or extension broadband access contracts, including being selected as key supplier for the deployment of Telmex's broadband access network based on VDSL2 and GPON technologies in Mexico.

The vendor said its full year 2012 guidance remains unchanged.

Alcatel-Lucent's stock was trading $1.58, down 1.56 percent, or 0.03 cents, on the Nasdaq market in late morning trading on Friday.

For more:
- see the earnings release
- Reuters has this article
- here's FierceWireless' take

Special report: Wireline in the first quarter of 2012

Related articles:
Alcatel-Lucent lights up Opelika, Ala.'s new FTTH network, smart grid initiative
Vermont Telephone builds out 100G backbone, gets set to launch IPTV
40G, 100G demand drove up DWDM market 19% in 2011
Alcatel-Lucent ends year in profit for first time
Telmex puts Alcatel-Lucent to work for its broadband network expansion

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