Alcatel hurt by weak sales

January 31, 2002 Posted: 1658 GMT

LONDON (CNN) -- Alcatel, Europe's No. 4 telecom equipment maker, on Thursday posted a huge fourth-quarter loss as a slowdown in the sector cut into sales.

The Paris-based company said it had a fourth-quarter operating loss of 368 million ($316 million), or a loss of 1.28 per share, compared to a profit of 832 million, or 0.36 per share, a year earlier.

Sales fell 20 percent to 6.77 billion euros in the fourth quarter.

For the year, Alcatel posted a net loss of 4.96 billion, compared to a net profit of 1.32 billion in 2000. It was only the second time in its history that Alcatel has ended a year in the red.

Alcatel's chief executive Serge Tchuruk said the industry slowdown would likely cut 30 percent off sales in the first quarter of 2002 but business should pick up in the second quarter.

"We expect 2002 to remain challenging. The first quarter will be weak with market softness compounding the usual seasonal effect (but) income from operations should be essentially unchanged sequentially by virtue of reduced costs and the non recurrence of exceptional charges," he said during a new conference.

"Even if markets remain soft, from the second quarter we see sequential growth in quarterly sales and operating income with full-year income from operations turning positive."

Meanwhile, Alcatel also reconfirmed it goal to return to profit at the operating level in 2002 following a drastic restructuring to bring down its breakeven sales level.

Investors responded to the positive outlook by pushing Alcatel's shares up almost 5 percent to 18 in early trading on Thursday in Paris, although they fell back to around 17.60 later in the session.

Alcatel, along with other equipment makers, has been hit hard by the cash crisis afflicting telecoms operators, whose heavy investment in external growth and new technology in recent years has left them with debt

mountains and little to spend on new infrastructure.

Alcatel, which is cutting 30,000 jobs over 2001 and 2002 in an effort to soften the blow, said it would try to save a further 1 billion in operating working capital in 2002, which should trim its debt further from the 2.66 billion at the end of 2001.

-- Reuters contributed to this report