Alcatel-Lucent in Strategy Review, Slowdown Spreads

Telecoms infrastructure group Alcatel-Lucent said the slowdown spread in its developed markets and new chief executive Ben Verwaayen will unveil a strategy review for December to streamline the company.

"We have truckloads of things to do," Verwaayen said on Thursday in a conference call with journalists after the group posted a decline in third quarter sales and operating earnings but stuck to 2008 guidance.

His to-do list includes "eliminating duplication, looking to efficiency, looking to our IT systems. I am not in a position today to talk about the details," he said.

Alcatel-Lucent's sales fell 6.6 percent in the quarter to 4.065 billion euros from a year ago or a 0.9 percent slide from the previous three months.

This was after a "reduction in spending by certain customers in developed markets, especially in fixed access and terrestrial optics."

Analysts market had been looking on average for sales of 4.087 billion.

They were also seeking comments on the health of the North American business after warnings of soft spending by U.S. phone companies by major rivals such as Nortel Networks , Adtran and Tellabs .

Verwaayen said spending here was "mixed."

He said the group is committed to its CDMA wireless business, largely the source of the writedowns that led to a string of profit warnings from the group.

He said a common platform for its client operators was in progress.

Even before the global crisis, Alcatel was hit hard by uncertainty among U.S. customers over which product lines would eventually survive the 2006 merger with Lucent.

The company also said today a sale of its 20.8 percent stake in French defense group Thales is one of the strategic options it has under consideration.

The firm said it still targeted an adjusted gross margin in the "mid-thirties" for 2008 and an adjusted operating margin in the low-mid single-digit range.

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