(Associated Press via NewsEdge) Tougher competition and complications from its $11.6 billion merger hit Alcatel-Lucent's revenue and wiped out fourth-quarter profit, the telecom equipment maker warned, sending its shares plummeting less than two months after the company's creation.
Alcatel-Lucent said revenue, calculated as if the tie-up had taken effect previously, fell 16% to 4.42 billion euros ($5.72 billion) in the October-December period from 5.25 billion euros ($6.8 billlion) a year earlier.
Operating income was 'approximately at break-even' after a 570 million euros ($742 million) profit in the fourth quarter of 2005.
Shares of Alcatel-Lucent fell $1.04, or 7.3%, to close at $13.15 on the New York Stock Exchange.
The revenue shortfalls are 'astonishing,' investment bank Dresdner Kleinwort said. 'Massive market share losses are in clear evidence.'
Full-year pro-forma revenue fell to 18.3 billion euros ($23.7 billion) from 18.6 billion euros ($24.2 billion) in 2005, Alcatel-Lucent's statement also said, but sales growth is expected to resume this year.
CEO Patricia Russo said implementation of the 'largest merger to date in our industry' had created short-term uncertainty among Alcatel-Lucent customers and staff.
'In addition, the last quarter of the year proved to be challenging from a market perspective, driven by a shift in spending from some of our large North American customers and heightened competition in the global wireless market,' Russo said.
RBC Capital Markets analyst Mark Sue noted that Lucent's wireless sales were weak during the quarter, after a large delivery of next-generation equipment to Verizon Wireless and Sprint Nextel in the third quarter.
Sue believes that Alcatel may be losing market share in wireless equipment to Ericsson and, to a lesser degree, to Nokia.
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