Telecoms equipment maker Alcatel, battling an industry slowdown and weak US demand, will stop making handsets and sell its enterprise business units to focus on networking, optics and space, the company said Tuesday.
Alcatel forecast that operating profit from its telecoms business would slip this year and said one-off restructuring charges and write-downs would lead to a second-quarter net loss of approximately three billion euros (US$2.57 billion) in its telecoms division.
Alcatel, which late on Tuesday broke off merger talks with US rival Lucent Technologies aimed at creating an industry giant that could better weather the market downturn, said it had decided to concentrate on service provider network activities, which make up 80 percent of its telecoms business.
"This focus will lead to expedite re-engineering, strategic alliances and divestitures of other current activities or assets," Alcatel said in a statement.
The company, which has begun the flotation of its Nexans cables unit, reiterated it would exit handset manufacturing, having already outsourced some output, and said it was examining a sale of its enterprise business division.
"Under current conditions, Alcatel's service providers business, proving to be robust, is still likely to progress around 10 percent in 2001 in revenues and have an operating income around last year's level," it said.
"In the e-business sector, losses are due largely to the very weak cellular handset market in Europe. With these contrasting trends, even if the total telecom revenue should grow by a few percent, the corresponding operating income is now seen below that of last year," it said.
Alcatel scaled back its 2001 outlook in April despite a firm first quarter, forecasting telecoms sales would show an increase of 5 to 15 percent, having previously forecast 20 percent.
Alcatel's optical components unit also cut 2001 sales and margin forecasts. Alcatel Optronics now expects 20 to 25 percent sales growth, less than half the previous forecast, and an operating margin of 15 percent rather than 20 percent.
Alcatel's shares rose as much as 1.65 euros yesterday, or 5.4 percent, to 32.5 euros.
Analysts had been braced for another downward revision given cloudy outlooks from peers and ever since a key client, Canada's 360networks, delayed two major projects which will hit Alcatel's revenues from underwater projects.
Alcatel said it was now pegging second-quarter operating income from telecoms at above 100 million euros.
Included in an expected three billion euro net loss are the restructuring costs linked to planned divestments, inventory depreciations, and a write-down on Alcatel's US$700 million of 360networks convertible bonds, the company said.
It said the second-quarter forecast did not include a two billion euro capital gain that Alcatel believes it can achieve by the end of the year through the asset disposal program.
MILESTONE: The foreign minister called the signing ‘a major step forward in US-Taiwan relations,’ while the Presidential Office said it was a symbol of the nations’ shared values US President Donald Trump on Tuesday signed into law the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the state department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct a review “not less than every five years.” It must then submit an updated report based on its findings “not later
The Presidential Office today thanked the US for enacting the Taiwan Assurance Implementation Act, which requires the US Department of State to regularly review and update guidelines governing official US interactions with Taiwan. The new law, signed by US President Donald Trump yesterday, is an amendment to the Taiwan Assurance Act of 2020 focused on reviewing guidelines on US interactions with Taiwan. Previously, the department was required to conduct a one-time review of its guidance governing relations with Taiwan, but under the new bill, the agency must conduct such a review "not less than every five years." It must then submit an updated
STAYING ALERT: China this week deployed its largest maritime show of force to date in the region, prompting concern in Taipei and Tokyo, which Beijing has brushed off Deterring conflict over Taiwan is a priority, the White House said in its National Security Strategy published yesterday, which also called on Japan and South Korea to increase their defense spending to help protect the first island chain. Taiwan is strategically positioned between Northeast and Southeast Asia, and provides direct access to the second island chain, with one-third of global shipping passing through the South China Sea, the report said. Given the implications for the US economy, along with Taiwan’s dominance in semiconductors, “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority,” it said. However, the strategy also reiterated
Taiwanese prosecutors charged Tokyo Electron Ltd for failing to prevent staff from allegedly stealing Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) trade secrets, escalating a dispute involving two Asian linchpins of a chip industry increasingly vital to national and economic security. Prosecutors indicted the Japanese company on four counts of contravening the Trade Secrets Act (營業秘密法) and the National Security Act (國家安全法), they said in a statement yesterday. They’re asking a local court to rule in favor of their request for Tokyo Electron pay a fine of up to NT$120 million (US$3.8 million) for failing in its duty to prevent the alleged
RSS