Alcatel SA, Europe's fourth-biggest phone-equipment maker, had a loss in the second-quarter after taking a 3.2 billion euro (US$2.8 billion) charge to write down the value of inventory and past acquisitions.
Alcatel had a loss of 3.1 billion euros, or 2.74 euros per share, its first since 1995, compared with a profit of 344 million, or US$0.32, a year earlier. The company plans to shed 20,000 employees, or 18 percent of its workforce, this year.
Since Chief Executive Serge Tchuruk failed in a bid to buy Lucent Technologies Inc in May, he's fired about 5,000 workers, farmed out cellphone production, and said he would sell half his factories to cut costs. Alcatel expects sales to fall in the third quarter and full-year sales to be about the same as 2000.
"When you're entering a slowdown, you don't know when it's going to end," said Chief Financial Officer Jean-Pierre Halbron in a conference call.
"We're expecting the telecom market to pick up some time next year."
The announcement came as Krish Prabhu, Alcatel's chief operating officer, said he would leave the company "for personal reasons" on Aug. 31. Prabhu, 46, who was considered a possible successor to Chief Executive Serge Tchuruk, has been named to Alcatel's board.
Shares of Alcatel, trading at their lowest in almost three years, have fallen 72 percent this year compared with a 60 percent drop for Bloomberg's European telecommunications equipment index.
The stock is the worst-performer on the Paris CAC 40 benchmark index this year.
Alcatel and Lucent ended merger talks after disagreeing on how to manage the combined company. A merger may have helped Lucent's recovery by reducing its dependence on US telecommunications companies. Alcatel would have gained more customers, a bigger footprint in the world's largest market and generated billions of dollars in cost savings.
Both Tchuruk and Lucent Chief Executive Henry Schacht have said last month that the companies wouldn't rekindle discussions.
Still, Alcatel said it's been gaining market share in the past quarter.
"When all your rivals report falling sales, except for Nokia Oyj, and our sales rise, then that means we're gaining market share," said Halbron.
Sales in the second quarter rose 4.5 percent to 6.77 billion euros. That excludes the contribution from Nexans, the cable unit Alcatel sold in an initial public offering recently.
Earnings before interest and taxes in the second quarter fell to 136 million euros from 638 million in the year earlier period.
The company's phone networks unit had sales of 3.12 billion euros in the quarter, up from 2.8 billion. Optics sales rose to 2.1 billion euros from 1.7 billion.
Sales at the company's e-business unit, which includes its mobile phone unit and services to businesses, fell to 811 million euros from 1.2 billion in the year earlier period.
The space and components unit had sales of 920 million euros, up from 880 million euros.
RSS