Profits of Alcatel Inc. dropped 42 percent because sales of wireless network decreased. The company net income is just $194 million after a profit of $334 million a year-ago. Annual income increased 1.4 percent year-over-year from $4.13 billion in 2005 to $4.19 billion for the same period in 2006. Sales slipped from last year's 1.372 billion to $1.249 billion. Serge Tchuruk, Alcatel's chief executive officer stated that the decrease in earnings was partly because Alcatel's customers were not eager to buy third-generation network equipment before the close of the French company's acquisition of Lucent Technologies Inc. The next factor is company's rising investments in next-generation technology, such as mobile TV and WiMAX.
Alcatel's business was indicated as a "Good growth" in the Chinese market. The company's acquisition of Nortel Network Ltd.'s UMTS radio access business activity is going to bring in additional business. Also the structure of the company is going to change in the coming quarter.
CDMA2000 1x EV-DO Revision A and HSDPA solutions are expected bring up company's results. Also they are going to convert IMS trials into contracts, specifically with KPN. KPN selected Lucent's IMS solution to replace its legacy public switched network. But not only IMS deal made profit, contracts in other technology units brought in a share of sales dollars.
Pat Russo, Lucent's chairman and CEO said: "During the fiscal year, we added 6 customers for our IMS portfolio, announced more than 70 contracts in 25 countries, and saw revenue growth in UMTS, professional services, data, optical and applications. We also continued to lead the market in CDMA, including the introduction of EV-DO Rev. A to support next-generation services."
Alcatel's stock went up 92 cents to $12.95 per share, Lucent's stock fell 17 cents to $2.51 per share.