Alcatel-Lucent reported a net loss for its second quarter and announced that it is planning to reduce its headcount by 5,000 in an effort to further cut costs. The results make it the latest infrastructure vendor to suffer at the hands of the economic downturn, along with Ericsson and Huawei.
The company reported a net loss of €254 million (US$ 313 million) for the second quarter on the back of revenue of €3.55 billion. The loss was particularly severe when the previous quarter’s €398 million net profit is taken into account.
Revenue was down 7.1 per cent from €3.82 billion reported in Q211 but up 10.6 per cent from the previous quarter’s €3.21 billion.
Revenue for the wireless network business amounted to €877 million, up 11.3 per cent quarter-on-quarter but down 18.7 per cent year-on-year. The decline in wireless revenue over the past year was attributed to “moderate or delayed spending of service providers” on 2G and 3G technologies. However, the company’s LTE business more than tripled its revenue during the course of the year.
North America and Europe provided the bulk of the company’s total revenue during the period but have declined 8.3 per cent and 15.6 per cent respectively compared to a year ago. The only region to have increased revenue in the past 12 months is the rest of the world with Central and Latin America recording a seventh consecutive quarter of double digit growth. All geographies were up compared to the previous quarter.
Alcatel-Lucent CEO Ben Verwaayen said the second quarter performance confirms the company’s strong position in “many attractive market segments” such as IP, next-generation optics and broadband access, but also the effects of the global economic situation.
Verwaayen commented that Alcatel-Lucent had launched "The Performance Program" to achieve a further €750 million cost reduction to bring total savings to €1.25 billion by the end of 2013. The plan includes the reduction of 5,000 roles in the organisation and the exit or restructuring of unprofitable managed services contracts and markets.
The company is targeting a strong positive net cash position by the end of 2012.