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Early marital problems continue for Alcatel-Lucent


Early marital problems continue for Alcatel-Lucent


The world’s largest maker of telecoms equipment Alcatel-Lucent has reported losses that were even worse than expected. It’s also seen its share price plummet by as much as nine percent. The French-American group is still counting the cost of an expensive merger that was completed last December. The couple’s courtship in May 2006, and in that quarter would have made a net income of 302 million euros. But it was a long and drawn out engagement and the wedding was expensive. The costs of the merger as well as pricing pressures and depreciating assets have led to operating losses in its first two full quarters. The latest quarterly loss of 336 million euros is more than double the amount forecast. And yet Alcatel-Lucent has been shedding jobs in order to cut costs. 3,800 have already gone and just under 9,000 more job losses are on the way. Process improvements should also help shave off overheads. But these savings have been absorbed by pricing pressures that have hurt profit margins. Investors will have to wait until next year for a forecast on the company’s operating margin to see whether the merger is working.

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