Published February 07, 2013
PARIS – Alcatel-Lucent announced the departure of its chief executive after the telecom equipment maker swung to a full-year net loss of 1.37 billion euros ($1.85 billion), hit by lower sales in Europe and China, and an impairment charge.
CEO Ben Verwaayen will step down once the group has found a successor, the company said in a statement on Thursday.
Since arriving in September 2008, Verwaayen has been unable to deliver on his pledge to return the group formed in a merger in 2006 to "normal" with steady cash flow and profit.
Even after trimming its product portfolio and several rounds of layoffs, the group remains hobbled by its smaller size and higher proportional cost base compared to rivals Ericsson
The group's fragility was laid bare last year when telecom operators cut back on spending on network gear as the global economic downturn dragged on.
Sales fell to 14.45 billion euros last year, down 5.7 percent compared with 2011, when Alcatel-Lucent managed its first annual profit since the merger.
In the fourth quarter, usually the strongest for telecom gear groups like Alcatel-Lucent, sales fell 1.3 percent compared with a year earlier to 4.1 billion euros. Strong 13.7 percent growth in the U.S. was not enough to offset weakness in Europe and Asia.
The group's annual adjusted operating profit was 117 million euros, giving it a margin of 2.9 percent.
Sales were largely in line with average estimates for sales of 4.12 billion euros in the fourth quarter and 14.51 billion for the year, according to Thomson Reuters I/B/E/S.
Verwaayen told a conference call that a rebound in spending by operators in China and continued strength in the U.S. would lead to higher sales of telecom equipment this year.
"China will improve this year because key decisions about LTE mobile will be made, and the U.S. will stay very strong," he said. He did not provide annual guidance for this year, however.
Alcatel added that it was scrapping the dividend for last year.
The company said it booked a non-cash charge of 1.4 billion euros "related to the depreciation of goodwill and fixed assets, and the corresponding impact on deferred tax."
Chief Financial Officer Paul Tufano said the charges stemmed largely from lower value attributed to the group's wireless and optics businesses.
In trading in Frankfurt, Alcatel-Lucent shares were up 5 percent to 1.32 euros at 0713 GMT.
Shares in Alcatel have risen nearly 30 percent this year, helped by a 2 billion-euro financing package that the company sealed in January, reassuring investors about its balance-sheet strength. But the group's market capitalization of 3 billion euros now stands at roughly one-tenth of its pre-merger levels.
"The combination of our recent refinancing and the implementation of our restructuring plan will put the company on a secure footing for the successor the Board will seek to appoint," Verwaayen said.
($1 = 0.7387 euros)
(Reporting by Leila Abboud; Editing by James Regan and Hans-Juergen Peters)