Alcatel-Lucent paints gloomy outlook after big loss

By Astrid Wendlandt

The French telecoms equipment group Alcatel, which acquired its U.S. rival Lucent in 2006, said the net loss figure included a 2.94 billion-euro-impairment charge taken in the fourth quarter to reflect a drop in value of Lucent's mobile assets.

The company said it expected to incur an adjusted operating loss in the first quarter of 2008 due to "seasonal patterns."

In light of the outlook and results, the group said it was prudent to scrap the dividend payment for 2007.

"The biggest problem is the outlook for this year," said Nomura analyst Richard Windsor. "Where are the 600 million euros promised in savings for 2007? Looks like they are going in the pockets of customers not in the pockets of shareholders."

"This has been a difficult year," he said in a conference call.

The group forecast the global telecoms equipment sales and services market to be flat to slightly up at constant euro/dollar exchange rate in 2008 and slightly down at the current rate.

Its performance compared with a loss of 3 million euros for the same period last year on the same basis.

Alcatel-Lucent fell to a record low of 3.80 euros but recovered as European stock markets turned sharply higher. By 8:14 a.m. (British time) the stock was down 0.2 percent at 4.12 euros.

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