Alcatel-Lucent announces annual profit

Alcatel-Lucent has announced its first annual profit in six years following a positive ending to what has been a difficult year for vendors.

The results eased the pressure on CEO, Ben Verwaayen, who had come under scrutiny in November after the company announced its negative cash flow had reached $1 billion. Alcatel-Lucent’s shares rose by 15% on Friday, with investors particularly encouraged by €541 million in free cash flow the company has accumulated in Q42011.

“We were operating in a challenging environment in 2011,” said Verwaayen in the company’s financial report. Alcatel-Lucent had an optimistic forecast for 2012 and said that it would continue to strengthen its portfolio through innovation of software assets and breakthroughs in wireless and fixed-line technologies, including 100G coherent technology, IP and vectoring.

The company experienced a 25% decline in operating profits for the fourth quarter compared to the previous year, but this was still less of a loss than some rival vendors.

A fourth quarter fall in profits of 66%, announced by Ericsson last month, had lowered expectations for rival companies The disappointing result for the Swedish vendor was said to reflect the difficult conditions in the European market, where competition for lower-margin next-generation upgrade contracts had decreased profits.

Alcatel-Lucent is planning to make €500 million of cost savings in 2012, part of which is expected to come through job cuts. Yesterday, French union leaders claimed Alcatel-Lucent was planning to cut up to 1,800 jobs in Europe after a meeting with the company’s management team. Positions were said to be under threat in Italy, France and Belgium.

Rival vendor, Nokia Siemens Networks, announced 17,000 job cuts last year in an attempt to reduce costs and restructure its business.

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