Alcatel-Lucent seen returning to profit in 3Q

PARIS - Alcatel-Lucent reports earnings for the fiscal third quarter on Thursday. The following is a summary of key develoments and analyst opinion related to the period.

OVERVIEW: Alcatel-Lucent is expected to report a return to profit after a string of six consecutive loss-making quarters stretching back to the beginning of 2007. While revenue is expected to still be under pressure from investment cutbacks at fixed-line telecommunications operators, Alcatel-Lucent may be benefitting from the effects of the vast restructuring and cost-cutting program it initiated last year, with aim of eliminating 16,500 jobs by the end of next year.

During the quarter Alcatel-Lucent shed its top two executives and Thursday's report will be the first time for new Chief Executive Ben Verwaayen.

BY THE NUMBERS: Alcatel-Lucent has said it expects third quarter revenue to be flat to slightly down compared to the second quarter, followed by a return to growth in the fourth quarter. It has also guided for a full-year sales decline in the low- to mid-single digit range, and an adjusted operating margin in the low- to mid-single digit range. Analysts polled by Thomson Reuters expect net profit of 164 million euros ($205 million) on sales of 4.05 billion euros ($5.07 billion.)

ANALYST TAKE: In an interview with the Associated Press, Morgan Stanley analyst Patrick Standaert said "Alcatel Lucent is lagging behind companies such as Nokia and Ericsson because they are trying to be all things to all people. The group isn't focused enough and management attention is impacted as a result."

WHAT'S AHEAD: Investors will be watching to see whether Alcatel-Lucent will decide to sell off the 21 percent stake in defence electronics contractor Thales SA to raise financing for other strategic objectives.

STOCK PERFORMANCE: shares fell 30 percent in the quarter. The stock was up 10.8 percent on Wednesday at 1.67 ($2.13).

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Nathalie Gentaz in Paris contributed to this article.

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