(Associated Press via NewsEdge) Alcatel, which is in the process of merging with rival Lucent, posted an 8% drop in second-quarter net profit as it struggled with deteriorating margins in the competitive wireless infrastructure business.
The French telecom equipment vendor also predicted that operating profit would change little in the third quarter from the 263 million euros ($331 million) posted in the second quarter.
Net profit fell to 180 million euros ($226.6 million) in the second quarter from 196 million euros a year earlier, even padded by a gain of 12 million euros ($15 million) from the sale of fixed assets.
Sales rose 7.6% to 3.38 billion euros ($4.25 billion), buoyed by continued strong growth of broadband Internet equipment at the fixed-line unit.
Margins across the industry are being hit by intense price competition as several players, including low-price Chinese vendors, are moving aggressively to gain market share and build a position in new markets. Alcatel's operating margin came in at 7.8%.
c 2006 The Associated Press
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