Alcatel tries to reassure on US but shares tumble

Alcatel-Lucent SA Thursday looked to reassure investors that demand for telecoms equipment in the U.S is not tapering off, after the company's share price plunged despite it posting a second quarter profit. At 1239 GMT, Alcatel shares were down 14% to EUR2.91 billion, one of the biggest losers on the CAC-40 index. The Paris-based company swung to a net profit in the second quarter of EUR43 million, compared to a net loss of EUR184 million the previous year and posted a 2.4% increase in revenue to EUR3.9 billion.
But some investors were spooked as the company missed expectations for adjusted earnings in the quarter and feared that the demand for telecom equipment in the U.S was now flat-lining. Alcatel-Lucent Chief Executive Ben Verwaayen reiterated the group's goals to post an adjusted operating margin of 5% or more this year and outperform the telecoms equipment and related services market, which he has previously said will grow "around 5%."
He also looked to allay concerns that some of his biggest clients, which include Verizon Communications Inc. and AT&T Inc., were tightening purse strings."In the U.S we still expect the second half of the year to be strong," he said."We have a very strong order book."
On Wednesday, industry bellwether Juniper Networks Inc.(JNPR) issued a weak outlook, sparking fears that major U.S carriers are ratcheting back spending. The U.S has largely powered Alcatel-Lucent's revenue growth in recent months and any fall in spending could have a significant effect on the Franco-U.S group's quest to become consistently profitable, analysts say.
So far in the U.S Alcatel-Lucent "has not been hit as hard as many feared and this is quite encouraging," said Richard Windsor, analyst at Nomura Securities. In the second quarter of 2011, U.S. sales increased 4.4% helping Alcatel Lucent swing to a net profit.
Verwaayen said that Alcatel-Lucent's diverse set of products and U.S clientele means that it won't suffer in the second half of the year."We have many more customers than we had 12 months ago," he said. He also reiterated that huge demand for data hungry smartphones and the popularity of video streaming Web sites, such as Google Inc's YouTube, mean.

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