Alcatel-Lucent reports massive 4th-quarter loss

[February 04, 2009]  PARIS (AP) -- Alcatel-Lucent reported Wednesday a massive euro3.89 billion loss in the fourth quarter after the world's largest provider of network technology for fixed and mobile telecommunications operators took its latest -- and largest -- charge to write down the value of its assets.

A euro3.91 billion ($5.1 billion) fourth quarter write-down gave the French-American technology giant its eighth consecutive quarterly loss since Alcatel SA's purchase of Lucent Technologies Inc. for $11.4 billion in 2006.

It had made a euro40 million loss in the previous quarter.

In a statement Wednesday, Alcatel-Lucent blamed the charge on a "drastic deterioration of the global economic outlook" during the quarter and plans for a "shift to a more focused portfolio."

The charge, which Chief Financial Officer Paul Tufano said mainly covered goodwill on "legacy products" in older technologies the company has acquired, left Alcatel-Lucent with an annual loss of euro5.22 billion.

Analysts had expected the company to finally return to profit after years of successive restructuring potentially paid off.

Instead, the company reiterated a target of merely breaking even at the operating level this year, with no return to profitability in sight.

"Yes it's a big number," Chief Executive Ben Verwaayen said of Alcatel-Lucent's largest-ever quarterly write-down. "But the impairment charge reflects the market."

Alcatel-Lucent shares lost 43 percent during the fourth quarter and are down another 4 percent so far this year. Telecom equipment makers are being hammered as telecommunications carriers and cable companies sharply cut back on capital spending.

On Tuesday Motorola, North America's largest maker of telecommunications equipment, posted a huge fourth-quarter loss as it recorded charges to reflect the shrinking value of its cell phone business. It also suspended its dividend, said its CEO had left and gave a disappointing forecast for the current quarter.

Speaking with reporters on a conference call, Tufano denied that Alcatel-Lucent would need to raise fresh capital to offset the impact of the billions in write-downs of its assets.

Asked whether he would buy Lucent if given the chance today, Verwaayen declined to speculate, saying it was unproductive to "look in the rear view window."

[Associated Press; By GREG KELLER]

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