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Alcatel faces tough year ahead
PARIS, France (CNN) -- Alcatel, Europe's biggest telecoms equipment maker, said fourth-quarter losses narrowed but warned 2003 would be another tough year. Net income in the three months to December 31 came in at 1.1 billion euros ($1 billion), down from a loss of 1.5 billion euros in the same period a year ago, the company said on Tuesday. But fourth-quarter sales fell to 4.5 billion euros from 6.77 billion in 2001. Alcatel (PCGE) has been aggressively cutting costs and has eliminated tens of thousands of jobs as it struggles with a weakening telecoms market and a collapse in capital expenditure by its biggest clients -- such as France Telecom and Deutsche Telekom. Alcatel has said the reorganisation will allow it to record an operating profit in 2003, even if the market deteriorates further. By the end of 2003, the company will employ 60,000 people, down from 99,000 at the end of 2001. The company, which said it swung to an operating profit of 20 million euros in the fourth quarter, said it expects the market to decline by about 15 percent in 2003. Sweden's Ericsson predicted on Monday that demand for wireless telephone equipment would be flat to down 10 percent this year. "The first quarter of 2003 will show the impact of the market downturn witnessed mid-2002," Chief Executive Serge Tchuruk said in a statement. "Therefore, taking into account today's more than 20 percent decline in U.S. dollar/euro rate versus the average first quarter of last year, we anticipate a 25 percent to 30 percent decrease in sales year on year." But Tchuruk said: "With quarterly sales breakeven target close to 3 billion euros by year-end, we remain confident that Alcatel will reach our operating breakeven target in 2003." "As a result of our cost cutting efforts, the 2003 first quarter operating loss should narrow versus the first quarter 2002." Alcatel's stock, which has fallen more than 60 percent over the past 12 months, fell 6 percent to 6.32 euros in early Paris trading on Tuesday.
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