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Alcatel-Lucent improves Q4 profit margins

Telecom equipment maker Alcatel-Lucent posted in-line fourth-quarter sales despite a marked slowdown in its key North American market and better than expected profit margins thanks to cost cuts.

The Paris-based company also expressed confidence that it would attain the central pledge of a three-year turnaround plan, namely to achieve positive free cash flow by the end of this year. Last year, it consumed more cash from operations than it made, resulting in negative 420 million euro in free cash flow.

Alcatel-Lucent, which competes with Sweden's Ericsson, China's Huawei and Finland's Nokia, saw fourth-quarter sales fall 6 percent to 3.68 billion euros ($4.22 billion). Operating profit fell 3 percent to 284 million euro.

Cost cuts on everything from real estate to staff helped the company improve gross margins to 34.7 percent compared to 33.4 percent in the same period a year ago.

Analysts had expected fourth-quarter sales of 3.69 billion euro and gross margin of 33.9 percent, according to Thomson Reuters I/B/E/S. Net income was forecast at 201 million euros.