Alcatel-Lucent to cut extra 4,000 jobs after 3Q loss
PARIS - Alcatel-Lucent SA plans to slash another 4,000 jobs after the telecomunications equipment maker reported a third-quarter loss of $373 million on Wednesday.
CEO Patricia Russo, under pressure to produce better results, said the situation remains unsatisfactory. She also said the French-American company's chief financial officer will step down soon.
The job cuts are in addition to the 12,500 announced in February and together amount to 20 percent of the 82,500 workers employed by Alcatel and Lucent when they combined.
Wednesday's announcement is designed to save an additional 400 million ($578 million) by 2009, the company said.
Russo , who took over after France's Alcatel SA bought U.S.-based Lucent Technologies last November , denied reports that she had been given an ultimatum by the board, saying it is "fully supportive" of her plans to expand the current three-year, 1.7 billion euro ($2.45 billion) cost-cutting program.
The much-anticipated new plans include a slimmed down management team, a more streamlined core carrier business and a focus on higher-margin businesses.
"Volumes we are seeing are not what we expected," Russo said in a conference call. "These are difficult but necessary decisions, and we will manage these reductions with care."
She declined "at the moment" to specify where the new job cuts would take place. The company has already shed 5,000 workers this year.
Unions in France were planning a one-hour strike Wednesday to protest the bigger cutbacks. In the initial plan, France lost 1,468 posts, or 12 percent of the total.
Chief Financial Officer Jean-Pascal Beaufret said he will leave the company "in coming weeks." He will be replaced by Hubert De Pesquidoux, previously CFO of Alcatel North America.
The third-quarter loss of 258 million euros was slightly larger than analysts' expectations, and contrasts to a pro forma net profit of 532 million euros a year ago. Sales in the quarter slumped 11 percent to 4.35 billion euros ($6.27 billion), hurt by lower investments in U.S. wireless networks.
For the fourth quarter, Alcatel-Lucent said it expects a "solid ramp-up in revenue." But for the full year, revenues are likely to be nearly flat, the company said, admitting that the result is at "the low end of the range previously provided."
Alcatel-Lucent shares rose 1.4 percent to 6.72 euros ($9.68) in Paris after the announcement, but some analysts and investors voiced doubts about the new course.
Cheuvreux analyst Remi Thomas said Russo's plan is "not ambitious enough."
Revenue is falling short of expectations, and to compensate Alcatel-Lucent needs to make savings of 1 billion euros ($1.44 billion), he said. That is more than double Wednesday's announcement and would require an extra 10,000 job cuts, he said.
The Alcatel-Lucent merger was designed to boost margins through cost and research and development savings, while improving the joint company's pricing power with telecom operators, its largest customers. But intense competition in the industry means many of the savings have been used on discounts passed on to customers.
The slowdown in the telecommunications market has hurt other companies as well.
Swedish wireless equipment maker LM Ericsson AB posted a 36 percent drop in third-quarter earnings earlier in October. Ericsson blamed a decline in high earnings activities, such as mobile-network upgrades and expansions.
Nokia Siemens Networks, the troubled networks division set up by Nokia Corp. and Siemens AG, had an operating loss of 120 million euros ($170 million) in the third quarter.
Aspreva Pharmaceuticals Q3 Profit Declines Aspreva Pharmaceuticals Corp. (ASPV, ASV.TO) announced that its third quarter net income was $23.3 million or $0.65 per share, compared to net income of $25.4 million or $0.71 per share in the third quarter 2006. Net income for the quarter was impacted by a previously announced one-time $20 million payment to Roche.
Research and Development expenses in the third quarter 2007 were $8.9 million, compared to $12.4 million in the third quarter 2006. Marketing, General and Administrative expenses in the third quarter 2007 were $11.2 million, compared to $10.0 million in the third quarter 2006.
Royalty revenues for the quarter were $62.3 million, up from $47.94 million in the prior year quarter.
Hess Shares Up on 3Q Profit, Oil's Climb Shares of Hess Corp. climbed Wednesday after the integrated oil company said its quarterly earnings rose 33 percent.
The increase came amid a broader rally of oil stocks, which rose along with the price of crude futures after the U.S. government reported a bigger-than-expected drop in oil inventories.
Light, sweet crude for December delivery rose $3.04 to $93.42 a barrel on the New York Mercantile Exchange after rising as high as $94, a new trading record.
Earlier in the day, Hess (nyse: HES - news - people ) said third-quarter profit rose to $395 million, or $1.23 per share, from $296 million, or 94 cents per share, during the same period last year.
Hess's profit fell short of analysts' average estimate of $1.36 per share, according to a Thomson Financial survey, but it included $33 million in charges. Thomson estimates typically exclude one-time charges.
Analysts said the adjusted results were generally in-line with expectations, and welcomed the company's surprisingly strong exploration and production results.
"We think Hess shares will benefit from our bullish and above-consensus view of crude oil, especially in light of its much healthier (exploration and production) business relative to years past," Goldman Sachs (nyse: GS - news - people ) analyst Arjun N. Murti wrote in a note to investors. He rates the stock "Buy" with a target price of $78, although he said he expects the stock could move even higher.
"Our target price does not give credit for future exploration success, which could have a meaningful impact on Hess's valuation," he said.
Hess shares rose $2.85, or 4.1 percent, to close at $71.61 Wednesday. Earlier in the session, the stock hit $72.60, 10 cents short of its 12-month high. Hess shares have traded as low as $40.35 in the past year. http://www.forbes.com/feeds/ap/2007/10/31/ap4286961.html
Manitowoc 3Q Profit Jumps 51 Percent Heavy equipment maker Manitowoc Co. said Wednesday its third-quarter profit rose 51 percent, driven by strong global demand for its cranes.
The company reported income of $75.9 million, or 59 cents per share, compared with $50.4 million, or 40 cents per share, in the year-ago period.
The recent quarter's results include a charge of 6 cents per share related to the redemption of its senior subordinated notes due 2012. Adjusted earnings per share for the quarter increased to 65 cents from 41 cents in the year-ago period, the company said.
Per-share figures for both periods reflect a two-for-one stock split executed on Sept. 10.
Revenue rose 29 percent to $1.01 billion from $779 million in the third quarter of 2006.
Analysts polled by Thomson Financial estimated, on average, earnings of 63 cents per share on sales of $973.6 million. Analyst estimates typically exclude one-time, unusual items.
Quarterly sales from the company's crane segment grew 39 percent to $812.3 million. Backlog totaled $2.7 billion as of Sept. 30, nearly double the level recorded at the same time last year, Manitowoc said.
"Demand for our full line of lifting solutions continues to be strong in all regions and for nearly all product lines," said Glen E. Tellock, president and chief executive, in a release. "Our view of the industry is that demand will remain strong through the end of the decade, with the potential for additional infrastructure and industrial projects in emerging markets to push that window of demand out even farther."
Shares rose $2.02, or 4.3 percent, to close at $49.26, but in aftermarket trading slipped $2.41, or 4.9 percent, to $46.85.
Sunoco posts 39 pct decline in 3Q profit Oil refiner Sunoco Inc. (NYSE:SUN) said Wednesday third-quarter profit fell 39 percent, hurt by sharp increases in crude oil prices and a decline in gasoline demand.
The company reported income of $216 million, or $1.81 per share, compared with $351 million, or $2.76 per share, in the year-ago period.
Revenue rose 10 percent to $11.5 billion from $10.5 billion in the third quarter of 2006.
Analysts polled by Thomson Financial, on average, estimated earnings of $2.14 per share.
'In a very volatile market for refined product margins, the company posted solid third-quarter results,' said John G. Drosdick, chairman and chief executive, in a release. 'Our refining and supply business earned $171 million despite lower margins that resulted from the end-of-driving-season decline in gasoline demand and the sharp increase in crude oil prices during the quarter.' Sunoco's refining and supply unit reported profit slid to $171 million from $273 million, primarily due to higher refinery expenses.
Profit in the company's retail marketing business fell by more than half to $31 million from $77 million in the year-ago quarter, hurt by lower average retail gasoline margins.
Sunoco shares rose $1.90 to close at $73.60, then fell $1.50 to $1.50 to $72.10 in aftermarket trading.
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