Alcatel-Lucent sets 5 percent margin target for 2011

By @ibtimes on

Telecom equipment maker Alcatel-Lucent set an adjusted operating target of 5 percent of 2011 sales, the lower end of what it had previously told investors it would achieve.

The group, which competes with larger rivals Ericsson of Sweden and China's Huawei, had previously aimed to hit 5-9 percent operating margins this year as part of CEO Ben Verwaayen's three-year quest to turn around the struggling company.

Verwaayen, a Dutchman who formerly led BT Group before taking over Alcatel-Lucent in September 2008, has pledged to make the equipment maker a normal company with positive free cash flow by the end of the year.

There is clear momentum in the market and for us as a company, said Verwaayen in a call with reporters. We feel confident that we will go grow faster than our addressable market and aim at a significant increase in profitability.

Alcatel-Lucent's full-year revenues were up 5.5 percent to 15.996 billion euro ($21.90 billion), while its adjusted operating income was 288 million euro.

Analysts had expected 2010 revenues would be up 3.8 percent to 15.74 billion euro.

The group had an adjusted operating margin of 1.8 percent in 2010, the lower end of the 1-5 percent range that it had been aiming for.

The results were helped by 22 percent growth in North America for 5.75 billion euro in revenue. Alcatel-Lucent earns about one third of its revenues in the region through big contracts with AT&T and Verizon.

U.S. operators are investing heavily in fourth-generation wireless rollouts to cope with an explosion in data traffic.

The trend can be seen elsewhere in Europe and Asia as well, and is expected to boost sales of equipment gear this year anywhere from 1.5-2.6 percent according to analysts.

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