("UPDATE: Alcatel-Lucent Lowers 2012 Performance Target," at 0755 GMT, misstated the expected earnings periods in the sixth paragraph, and didn't specify that the expected operating loss was an adjusted figure in the same paragraph. The correct version follows:)
-- Alcatel-Lucent expects 2Q EUR40 million loss, EUR3.5 billion revenue
-- Alcatel Lucent shares fall 15% at 20-year low
By Inti Landauro
PARIS--French telecom equipment maker Alcatel-Lucent SA (ALU.FR) said Tuesday that weak economic conditions will mean it will miss a key performance target this year, sending its shares spiraling 15% in early trade.
"In light of year-to-date performance and the difficult macro-economic environment, Alcatel-Lucent will not be able to achieve its previously announced adjusted operating margin guidance for the full-year 2012," it said, despite an expected pick up in the second half of the year.
Three months ago the company had predicted a higher operating margin this year than last, and a positive net cash position at the end of the year.
The sputtering European economy and fierce competition from Asian competitors such as Huawei Technologies Co. have hit Alcatel-Lucent hard. Despite turnaround efforts from the company's Chief Executive Ben Verwaayen, who took over four years ago, the company has been burning cash as competition in the market for telecom equipment intensified and the economy stalled.
The company posted a profit in 2011, the first since the merger of France's Alcatel and U.S.-based Lucent six years ago, but the company's shares have fallen almost 60% over past 12 months. At 0840 GMT, they were trading down 15% at EUR0.96, their lowest level in more than two decades.
Alcatel-Lucent posted an operating loss of EUR289 million in the first quarter of 2012, as revenue fell 12% on year to EUR3.21 billion. It said it expects to post an adjusted operating loss of EUR40 million in the second quarter and revenue of EUR3.5 billion. This compares with a EUR43 million net profit and a revenue of EUR3.9 billion in the second quarter of 2011.
The company will announce further details on its business performance and full-year guidance during its second-quarter earnings presentation on July 26.
The news follows a similar profit warning from Chinese rival ZTE Corp on Monday. ZTE said its first-half profit is likely to fall between 60% and 80% compared with the same period a year earlier, pushing its shares down 16%. It blamed the drop on a high base owing to investment gains in 2011, foreign-exchange losses and delays in tenders for contracts from domestic carriers such as China Mobile Ltd.
Other competitors Sweden's LM Ericsson (ERIC) and Nokia Siemens Networks are due to report their second-quarter results later this week.
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