The record quarterly loss, besides the string of losses in the past, suffered by the French Telecom equipment maker puts a question mark over the wisdom of the cross-Atlantic merger between France's Alcatel and US-based Lucent. When Patricia Russo appeared at her first press conference, after being appointed as the CEO of the global telecom equipment behemoth Alcatel-Lucent in December 2006, she was visibly pleased. But, since then, the America-born lady has had little reason to cheer about, as the world's largest telecom equipment manufacturer has posted four consecutive quarterly losses.
Ever since the merger, the company has been suffering and the
share prices have plummeted by around 60%, and it was the
worst performer in France's benchmark CAC 40 Index, which
declined by 17% during the same period. Alcatel-Lucent's
market value has also plunged by €13.5 bn since December
2006, when Alcatel SA of France bought Lucent Technologies
Inc. of US.The merger, which was mainly the outcome of strategic
compulsion, has never shown much promise and soon started
to earn the shareholders' wrath. In the first year, as a
merged entity, the company posted a net loss of €3.5
bn, and in the fourth quarter, the company reported a record
loss of €2.58 bn, up from €615 mn a year earlier,
whereas the analysts anticipated a fourth-quarter profit
of €181 mn. The loss in 2007 also includes a €2.5
bn write-down related to the value of a mobile phone business
owned by Lucent.
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