Alcatel-Lucent Reports 1st Quarter Loss

PARIS--Network-equipment company Alcatel-Lucent SA on Thursday reported another first-quarter net loss but said profit margins rose, highlighting the promise and the peril Nokia Corp. faces as part of is EUR15.6 billion ($17.7 billion) takeover bid of the Franco-American firm.

The Paris-based maker of wireless network gear and Internet-routing equipment posted a net loss of EUR72 million, or 3 cents a share, for the first three months of the year, compared with a loss of EUR73 million, or 3 cents a share, in the same period last year.

Alcatel-Lucent's adjusted operating income more than doubled to EUR88 million, compared with EUR33 million a year ago, roughly in line with analysts" expectations, as the company improved its gross margin to 34.6% from 32.3% a year earlier.

Revenue rose 9.2% to EUR3.24 billion for the quarter, but fell 4% after accounting for the impact of the strengthening dollar--dragged down by slowing sales in the U.S. market, home to two of its biggest clients, Verizon Communications Inc. and AT&T Inc.

Alcatel-Lucent continued to burn cash, reporting a EUR332 million free cash flow loss in the first quarter, compared to a free cash flow loss of EUR398 million a year earlier. But Chief Executive Michel Combes reiterated his commitment that Alcatel-Lucent will to show its first-ever full year of positive free cash flow in 2015.

"In a challenging environment and in particular a slow spending environment in North America, Alcatel-Lucent was able to increase its margin," Mr. Combes said on a conference call with journalists.

Write to Sam Schechner at [e-mail]

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