French company (read that and weep, America) Alcatel-Lucent revealed its Q4 results yesterday amid some dismay at its lacklustre performance. The company attributed these in large part to the costs of the takeover of the ailing US giant, the blighted equipment manufacturing offspring of mighty AT&T and hallowed Bell Labs.

Lucent’s numbers are included only in the final month (December) of the Q4 and FY2006 figures. These show revenues of €3.87bn in the final quarter with a profit of €0.12bn and an estimated full-year result of €12.3bn and €0.71bn respectively.

The kicker is that these profits, even at such marginal levels, will be comfortably wiped out by the costs associated with the takeover. The company refers to these as “restructuring charges (which consist primarily of non cash write-offs of intangibles associated with product rationalization and of a limited impact from headcount reduction at this point) and asset impairment charges of capitalized development costs are expected to be approximately Euro (0.80) billion for the fourth quarter 2006.”

And you can bet your last euro that “ limited impact from headcount reduction at this point” is shorthand for ‘we have not even started to sack people yet’. Added to this, Alcatel says that its adjusted pro forma year-on-year revenue for Q4, based on the notion that the takeover had been in place in 2005, is down by more than 15% on the year.

“2006 was an extraordinary year in many ways for our company”, commented Patricia Russo, Chief Executive Officer of Alcatel-Lucent. “We completed the first and largest merger to date in our industry, we enhanced our wireless portfolio through the acquisition of Nortel’s UMTS radio business and we completed a substantial part of the transfer of some of our operations to Thales.”

Russo went on: “in the past few months, these moves created short-term uncertainty for our customers and for our people as we worked to develop the combined company’s product portfolio and new organization structure. This uncertainty together with the work required to close the merger significantly impacted the business. In addition, the last quarter of the year proved to be challenging from a market perspective, driven by a shift in spending from some of our large North American customers and heightened competition in the global wireless market.”

Read into that what you like, mes amis.
Jim Chalmers