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Alcatel-Lucent reports massive 4th-quarter loss

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[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.

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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]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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