Travelusacc Discussion Threads

[ariane] 02/5/2005 14:14

Oddo Cuts Alcatel Estimates On 1Q, BT Deal

Monday, May 02, 2005 5:20:40 AM ET
Dow Jones Newswires





0844 GMT [Dow Jones] Oddo cuts Alcatel's (ALA) FY operating profit, revenue estimates after "disappointing" 1Q, loss of the access side of BT Group's (BT) GPB10B contract for a "next generation", or NGN, fixed-line network. "Alcatel only won the contract for IP routing when we were expecting it also to win the access side... Following this deal, we are no longer convinced that the French equipment maker can really assert itself as one of the leaders in NGN networks." Keeps at accumulate. Shares +1.1% to EUR8.33 after recent sharp drop. (BJL)



Oddo Cuts Alcatel Estimates On 1Q, BT Deal Monday, May 02, 2005 5:20:40 AM ET
Dow Jones Newswires

0844 GMT [Dow Jones] Oddo cuts Alcatel's (ALA) FY operating profit, revenue estimates after "disappointing" 1Q, loss of the access side of BT Group's (BT) GPB10B contract for a "next generation", or NGN, fixed-line network. "Alcatel only won the contract for IP routing when we were expecting it also to win the access side... Following this deal, we are no longer convinced that the French equipment maker can really assert itself as one of the leaders in NGN networks." Keeps at accumulate. Shares +1.1% to EUR8.33 after recent sharp drop. (BJL)

[waldron] 30/4/2005 09:03

May. 3, 2005 Shareholders Meeting (Paris, Maison de la Chimie)

[waldron] 30/4/2005 09:02

Alcatel, the world's biggest supplier of broadband Internet equipment, posted lower first-quarter earnings Thursday and said operating profit grew less than analysts expected because of the cost of introducing new network software.  
First-quarter net income fell 55 percent to €124 million, or $160 million, from €278 million, a year earlier, the Paris-based company said. The year-earlier figure included a gain from selling a unit. 
Operating income rose 27 percent, less than half the increase analysts expected. Profit margins were hurt by costs of marketing new mobile-network gear and the expense of currency hedges, said the chief financial officer, Jean-Pascal Beaufret, at a press conference.  
Sales of fixed-line equipment also declined. But overall revenue rose 3.7 percent in the quarter, to €2.61 billion from €2.52 billion, a year earlier.  
Alcatel shares closed at €8.25 in Paris on Thursday, a drop of 70 cents

[waldron] 29/4/2005 15:48

PARIS (AFX) - Alcatel and Finmeccanica said the merger of their space
operations is expected to be in place from July 1 after news this morning the
the EU granted approval to the Alcatel Space, and Alenia Spazio joint ventures.
Alcatel and Finmeccanica announced in January their plans to merge their
space divisions to create two joint ventures: Alcatel Alenia Space, which will
be owned 67 pct by Alcatel and 33 pct by Finmeccanica, and Telespazio, which
will be owned 67 pct by Finmeccanica and 33 pct by Alcatel.
The European Commission granted conditional approval to the two joint
ventures, saying that while it had serious concerns for certain satellite
subsystems, Alcatel and Alenia had addressed these by offering a licence for
both subsystems.
Alcate and Finmeccanica said the licence compromise refers to Telemetry,
Tracking and Control (TTC) and radar altimeters activities.
mrg/nes

[waldron] 29/4/2005 15:48

PARIS (AFX) - Alcatel and Finmeccanica said the merger of their space
operations is expected to be in place from July 1 after news this morning the
the EU granted approval to the Alcatel Space, and Alenia Spazio joint ventures.
Alcatel and Finmeccanica announced in January their plans to merge their
space divisions to create two joint ventures: Alcatel Alenia Space, which will
be owned 67 pct by Alcatel and 33 pct by Finmeccanica, and Telespazio, which
will be owned 67 pct by Finmeccanica and 33 pct by Alcatel.
The European Commission granted conditional approval to the two joint
ventures, saying that while it had serious concerns for certain satellite
subsystems, Alcatel and Alenia had addressed these by offering a licence for
both subsystems.
Alcate and Finmeccanica said the licence compromise refers to Telemetry,
Tracking and Control (TTC) and radar altimeters activities.
mrg/nes

[waldron] 29/4/2005 14:25

Alcatel "overweight"

Friday, April 29, 2005 7:46:27 AM ET
J.P. Morgan Securities



LONDON, April 29 (newratings.com) - Analyst Mark Davies-Jones of JP Morgan reiterates his "overweight" rating on Alcatel (CGE.ETR).

In a research note published this morning, the analyst mentions that the company reported sluggish results for 1Q, in-line with expectations. Alcatel has announced aggressive operating margin guidance in the Mobile segment for 2Q and beyond. The impact on Alcatel's share price, following the declaration of the company's weak results, is likely to be overdone, JP Morgan adds.

[waldron] 29/4/2005 14:22

Deutsche Bank Ups Alcatel To Buy

Friday, April 29, 2005 8:08:12 AM ET
Dow Jones Newswires





0828 GMT [Dow Jones]--Deutsche Bank upgrades Alcatel (ALA) to buy from hold with target price of EUR10.5, saying "Alcatel remains posed for a recovery in the second half." Adds, "emerging market wins could give long-term benefits," even with stock -30% since February which followed company saying expansion in Brazil, India weighs on margins. "Our forecast for operating margin in 2005 is below the company target of 10%, which implies that there is an added risk of the company having to reduce their margin target later this year." Stock +0.9% to EUR8.32. (BJL)

[waldron] 29/4/2005 14:21

Visibility The Casualty Of Alcatel's 1Q

Friday, April 29, 2005 8:08:37 AM ET
Dow Jones Newswires





0836 GMT [Dow Jones] Visibility was the main casualty of Alcatel's (ALA) disappointing results, says Richard Windsor of Nomura, who cuts 05 earnings targets. "Financial performance has become much more volatile and seasonal than we had expected as margins look like they will fluctuate wildly this year." Adds "shares still look attractive, which gives us confidence that there is little downside left." Keeps at buy. Shares +0.6% to EUR8.30. (BJL)

[waldron] 29/4/2005 14:20

Lehman Cuts Alcatel Target,Keeps Underweight

Friday, April 29, 2005 8:40:48 AM ET
Dow Jones Newswires





1230 GMT [Dow Jones] Lehman Brothers cuts Alcatel (ALA) target to EUR8.1 from EUR9.5, keeps at underweight. Notes weak 1Q profitability, broader industry concerns post BT Group (BT) vendor announcements. Downside risk beyond EUR7.5 seems unlikely, but other stocks in sector offer better earnings dynamics. Shares +1.6% at EUR8.38. (CHP)

[waldron] 29/4/2005 09:01

BRUSSELS (AFX) - The European Commission said it has granted conditional
approval to two joint ventures resulting from Alcatel's merger of its space
activities with those of Alenia Spazio and Finmeccanica SpA unit Telespazio.
The commission said it had serious concerns for certain satellite
subsystems, but that Alcatel and Alenia addressed these by offering a licence
for both subsystems.
"These conditions will maintain effective competition in the European space
industry, while allowing the parties to structure their businesses more
efficiently through the joint ventures," EU competition commissioner Neelie
Kroes said.
vm/jfr

[waldron] 29/4/2005 07:58

Associated Press
Update 1: Alcatel Earnings Held Back by Weak Dollar
04.28.2005, 05:09 PM

French telecommunications equipment maker Alcatel SA said the weak dollar and declining sales to cell-phone networks weighed on sales growth in the first quarter.

Net profit fell to 124 million euros ($160 million), despite 69 million euros in capital gains, from 278 million euros a year earlier. The 2004 first-quarter profit had been boosted by 231 million euros ($299 million) of income from discontinued operations, the company said.

Operating profit rose to 107 million euros ($138.4 million) in the three months through March from 84 million euros a year earlier, but missed analysts' expectations of 150 million euros, sparking a slump in the shares Thursday.

Alcatel's American depositary shares fell $1.22, or 10 percent, to close at $10.54 on the New York Stock Exchange.

Sales added 3.7 percent to 2.61 billion euros ($3.38 billion) and would have gained 6.1 percent at constant currencies.

The figures brought Alcatel's operating margin to 4.1 percent from 3.3 percent, but the margin was much lower than the full-year goal of "over 10 percent." Chief Financial Officer Jean Pascal Beaufret said Alcatel will meet this target and attributed first-quarter weakness to swings in the dollar, which knocked 0.8 percentage points off the margin.

"Revenue is fine, it's the (operating profit) that's the problem," said Richard Windsor, an analyst at Nomura in London who recommends buying Alcatel shares. "What these results will do is make the skeptics come out ... and shake faith in Alcatel's guidance," he said.

The earnings weakness comes as Alcatel examines ways of expanding its defense-sector capabilities with Thales SA and little over a week after it named Mike Quigley, the former head of Alcatel's fixed-line and North American operations, as its new chief operating officer.

[waldron] 28/4/2005 13:02

Alcatel Earnings Decline on Network Software Costs (Update4) April 28 (Bloomberg) -- Alcatel SA, the world's biggest supplier of broadband Internet equipment, posted lower first- quarter earnings and said operating profit grew less than analysts expected because of costs to introduce new network software.

First-quarter net income fell 55 percent to 124 million euros ($160 million), or 9 cents a share, from 278 million euros, or 20 cents, a year earlier, the Paris-based company said in a statement. Operating income rose 27 percent to 107 million euros. Profit on that basis as a percentage of sales increased to 4.1 percent from 3.3 percent. Chief Executive Serge Tchuruk repeated a forecast for full-year operating margin of 10 percent. Alcatel shares fell.

``All eyes were on the operating margin,'' said Franck Hennin, an analyst at Richelieu Finance in Paris, which oversees about $2.2 billion. ``There was a disappointment. Alcatel has a lot of difficulties. Everything that's mobile network is a bit behind. The competition is ferocious.''

Profit in the mobile communications unit was held back by costs to introduce and market new network software, Chief Financial Officer Jean-Pascal Beaufret said in a conference call. The company expects cost savings this year of 200 million euros from cutting fixed expenses.

Alcatel shares declined as much as 57 cents, or 6.4 percent, to 8.38 euros, and traded at 8.41 euros at 12:02 p.m. in Paris. Before today the stock had declined 21.8 percent this year.

Forecasts

Operating profit had been expected to rise 88 percent to 158 million euros, according to the median estimate of 19 analysts in a Bloomberg News survey.

Revenue rose 3.7 percent to 2.61 billion euros from 2.52 billion a year earlier. The company reiterated its forecast for full-year sales to increase between 3 percent and 5 percent, and Beaufret said the company expects second-quarter revenue to gain at that pace.

``Whilst they're a solid set of results, they don't bring a spark of good news,'' said Gary Dugan, head of equity research at Barclays Investment Services in London. ``The margins are at the low end of expectations, the sales growth and the guidance remains virtually unchanged. It's all dependent upon the second half of the year delivering a stronger growth rate than we've seen in the first half. The market's not in the mood to buy into that.''

Competitors

Ericsson AB, the world's largest supplier of mobile-phone networks, last week reiterated a forecast for ``slight'' industry growth this year, which it defines as 2 percent to 5 percent.

Ericsson's first-quarter revenue rose 12 percent, helped by cost cuts and demand for mobile networks. U.S. rival Lucent Technologies Inc. said last week sales in the quarter through March rose 6.4 percent on demand for wireless gear.

``Because of its smaller market share in for example wireless networks, Alcatel lags larger competitors in profitability,'' said Marko Alaraatikka, a fund manager at Evli Investment Management in Helsinki, which oversees $3.9 billion. ``It has smaller volumes, and it also needs to compete with price.''

Net income had been expected to slip to 66.5 million euros, or 5 cents a share, according to the median estimate of 18 analysts in a Bloomberg survey.

Last year's first-quarter net income included the effect of the sale of battery maker Saft. Alcatel sold the unit in January 2004 to Doughty Hanson & Co. for 390 million euros. Alcatel sold the unit last year to focus on telecommunications equipment.

Next CEO

Chief Operating Officer Mike Quigley, who was named to the post April 19, is in a ``good position'' to become chief executive officer, Tchuruk said at a Paris press conference.

The euro was worth an average $1.31 in the first quarter, compared with $1.25 in the same period a year earlier, meaning sales in dollars translated into fewer euros. North America accounted for 14 percent of Alcatel's revenue last year.

In 2004 the company had its first annual profit in four years, under French accounting rules, after Tchuruk shed more than 40,000 jobs to stem three years of losses. The company trimmed its workforce by 8 percent last year to about 56,000 at the end of 2004.

Alcatel had net cash of 304 million euros at the end of March from 671 million euros at the end of 2004, in part due to an increase in inventories linked to its order backlog.

Moody's Investors Service on April 11 raised the company's credit rating two steps to Ba1, one level below investment grade. The assessment is one step above the rating by Standard & Poor's.

[waldron] 28/4/2005 08:05

Alcatel Likely To Fall on 1Q, Outlook Shaken

Thursday, April 28, 2005 2:33:42 AM ET
Dow Jones Newswires



0626 GMT [Dow Jones] Alcatel's (ALA) 1Q results are "a bit disappointing," says Richard Windsor of Nomura, who rates stock buy. "Revenue is fine, it's the (operating profit) that's the problem." Says EUR107M figure missed EUR162M consensus and his estimate of EUR200M. "Company has lost a bit of market share in broadband access, which is not encouraging." Adds, "it's keeping guidance ... but what these results will do is make the skeptics come out, and (will) shake faith in Alcatel's guidance." Sees stock falling. Shares closed at EUR8.95. (BJL)

[waldron] 28/4/2005 07:55

LONDON (AFX) - BT Group PLC, the UK's incumbent telecoms operator, has named
its 8 main suppliers for the 10 bln stg overhaul of its domestic network, dubbed
the 21st Century Network.
France's Alcatel SA, US telecoms equipment giant Cisco Systems Inc and
Germany's Siemens AG have been selected as suppliers of the routing products
that will direct voice, data and video services over the new network.
Meanwhile, Fujitsu and China's Huawei Technologies, which recently signed a
co-opeartion deal with UK group Marconi Corp PLC, will provide the equipment
that links BT's existing access network with the new network.
Tellingly, Marconi has not been selected as a preferred supplier as many in
the industry had expected. BT is by far Marconi's largest customer, and the
beleaguered equipment supplier had invested heavily in conducting trials of its
routing gear for the former monopoly operator.
[e-mail]
sd/hjp

[waldron] 28/4/2005 07:22

PARIS (AFX) - Alcatel maintained its existing earnings guidance for
full-year 2005 despite a "very competitive market" but its operating margin in
the first quarter fell short of analyst expectations.
Alcatel had a 4.4 pct operating margin, a record for the group in the
"traditional seasonally low quarter" but this compared to analyst expectations
ranging from 5.9-6.1 pct, up from the 3.3 pct published a year ago.
Net profit however was well ahead of consensus, thanks to a one-off gain
from the sale of Nexans shares.
[e-mail]
mrg/jfr

[waldron] 27/4/2005 12:29

PARIS (AFX) - Alcatel said it won an order to upgrade Swisscom AG's network
with IP broadband capability.
No financial details were disclosed.
Following the upgrade, Swisscom clients will have access to bandwidth of 25
Mbps and more.
Alcatel is Swisscom's sole network supplier.
[e-mail]
mrg/cmr

[grupo] 26/4/2005 19:04

PARIS (AFX) - Alcatel said it has won an order from Dobson Communications, a
US rural wireless telecoms operator, to update its GSM mobile network.
No financial details were disclosed.
[e-mail]
mrg/cml

[waldron] 25/4/2005 18:40

Alcatel

Primary Credit Analyst(s):
Leandro de Torres Zabala, London (44) 20-7176-3821;
[e-mail]
Secondary Credit Analyst(s):
Guy Deslondes, Milan (39) 02-72111-213;
[e-mail]
Publication date: 25-Apr-05, 11:26:15 EST








ISSUER CREDIT RATING
Alcatel
Corporate Credit Rating BB/Stable/B


AFFIRMED RATINGS
Alcatel
Sr unsecd debt BB
CP B


Corporate credit rating history:
Nov. 10, 2004 BB/B
Mar. 10, 2004 BB-/B
Oct. 4, 2002 B+/B
July 12, 2002 BB+/B
Feb. 13, 2002 BBB/A-3
Nov. 13, 2001 BBB/A-2
Aug. 6, 2001 BBB+/A-2




Major Rating Factors


Strengths:


Solid liquidity, with gross cash and equivalents of €5.1 billion at Dec. 31, 2004, exceeding financial gross debt by €752 million;
Recent restructuring initiatives, shaping a leaner and more focused company that is better equipped to adapt to industry changes;
A wide range of products and technologies, some with top positions worldwide, making the company an integral supplier for its customers.
A diversified customer base, with about 80% of sales to incumbent telecoms operators enjoying good credit quality, and no single customer exposure of more than 10% of sales;
About 30% of sales to operations not directly related to carrier spending, in areas such as space solutions, services fees under term contracts, and submarine activities;
Large number of operations that produce economies of scale in a highly capital-intensive, technology-driven, and competitive industry.

Weaknesses:


A dramatically smaller and more aggressive telecoms-equipment industry with strong pricing pressure;
Continued weak demand in fixed communications, particularly in the legacy circuit switching and optical businesses and in the U.S. market, triggering further restructuring charges.
Modest free cash flow generation reflecting moderate sales growth, restructuring charges, and some build up in operating working-capital levels.
Ongoing major changes in the industry's technology direction, such as the convergence of fixed and mobile technologies.
Substantial exposure to currency fluctuations, albeit partially hedged by a sizable portion of costs denominated in foreign currency.




Rationale

The ratings on France-based telecoms equipment supplier Alcatel reflect the company's recently stabilized sales, improved cost break-even point, sound portfolio of products and technologies, generally creditworthy customer base, and net cash position. The ratings remain constrained, however, by a dramatically smaller and more aggressive industry after the record meltdown in sales in 2001-2003; continued weakness in certain fixed communication technologies; reasonable profitability and modest free cash flow generation; and ongoing major technological changes in the industry, as illustrated by the convergence of fixed and mobile telecommunications, the migration of narrowband switching to internet protocol (IP) technologies, and fixed-to-mobile substitution.

Alcatel had gross debt of about €4.4 billion at Dec. 31, 2004, of which €3.8 billion in notes.

The telecoms equipment market recovered moderately in 2004, underpinned by brisk growth in mobile infrastructure and in space and signaling activities, as well as in broadband access and IP-based communications, albeit with intense price competition and a continuing decline in narrowband voice services. Alcatel achieved several key milestones in 2004, including 5.7% sales growth at comparable structure and constant currency, although sales decreased by 2% unadjusted for disposals of underperforming assets; a significantly lower break-even point; operating margin of 8% (French GAAP); meaningfully improved funds from operations (FFO); modest free cash flow in the last quarter of 2004 for the first time in the year; and strong liquidity.

2005 is set to be a year of consolidation, with low-to-mid single-digit revenue growth (versus restated 2004 sales at a constant euro/dollar exchange rate), supported by growth in mobile communications in emerging markets--although at more moderate levels than in 2004, advances in private communications, and a slow recovery in wireline equipment, probably in the second half of the year. Given Alcatel's prospects for greater cost efficiency, its streamlined operating structure, and tighter operating discipline, the group is on course for its target of 10% operating margin in 2005 (French GAAP), up from 8% in 2004. This said, given Alcatel's still meaningful operating leverage relative to its sales, the company needs to continue implementing its restructuring program and achieve at least low-single-digit sales growth in order to generate meaningful, sustainable free cash flow.

Alcatel had a strong financial profile at Dec. 31, 2004, with gross cash and equivalents of €5.1 billion against gross financial debt of €4.4 billion. The result of substantial cash generated primarily by unwinding working capital and asset disposals, this cash pile constitutes an important buffer against any potential, unforeseen negative free cash flow that could result from temporary weakness in trading conditions, restructuring charges, or increases in operating working capital. At Dec. 31, 2004, Alcatel's ratio of lease-adjusted gross financial debt to 2004 EBITDA was 3.2x and its ratio of lease-adjusted funds from operations to gross debt was 9%.


Short-term credit factors

The 'B' short-term rating on Alcatel reflects the fact that, although benefiting from substantial liquid assets, the company's liquidity remains exposed to prevailing soft market conditions and weak free cash flow generation.

Alcatel's liquidity is currently supported by:


Cash and marketable securities totaling €5.1 billion at Dec. 31, 2004;
Investments in France-based Thales S.A. (A-/Stable/A-2), with an estimated market value of about €574 million;
Improved--albeit modest--free cash flow generation of €71 million in the fourth quarter of 2004, and negative €669 million over the full year; and
A securitization program of up to €150 million (of which €80 million was used at Dec. 31, 2004), extendable to €250 million. Alcatel also has an undrawn €1 billion unsecured, syndicated revolving credit facility maturing in June 2009, for general corporate purposes. Ability to draw is conditional on a financial covenant linked to the company's ability to generate sufficient cash to repay its debt. Alcatel was compliant with the covenant at year-end 2004, but the covenant was not running given the group's positive net cash position.

The main calls on Alcatel's cash over the medium term will be:


Financial debt maturities of about €1 billion in 2005 (of which a significant part is a revolving credit), €598 million in 2006, and €194 million in 2007;
Expected restructuring expenses of €662 million--as provisioned at year-end 2004--for layoffs, primarily in France, Germany, and Spain; and
Expected moderate increases in operating working capital as inventories and receivables rise in line with anticipated higher revenues.




Outlook

The stable outlook reflects Standard & Poor's Ratings Services' expectation that telecoms equipment sales will grow moderately during 2005 and that Alcatel will continue to improve its cost structure and maintain a net cash position to withstand any unforeseen temporary weaknesses in demand. To justify a higher rating, Standard & Poor's needs to see meaningful and sustainable revenue growth; a stabilization in the fixed communications business; further headway in Alcatel's restructuring program to bring the group nearer to its targeted 10% operating margin (French GAAP), and progress towards achieving positive and critically sustainable free cash flow.

Alcatel currently benefits from a net cash position. Given the cyclicality, competitiveness, excess supply capacity, and rapid technological changes that characterize the global telecoms equipment industry, Standard & Poor's expects the company to maintain solid cash levels, sufficient liquidity to generally cover debt maturities for three years, and modest gross debt leverage. Alcatel has announced that it will not distribute a dividend in 2005. Standard & Poor's expects that the company will only undertake selective small-scale acquisitions in complementary technologies.





Business Description

With revenues of about €12.3 billion in 2004 and approximately 55,700 employees spread across 130 countries, Alcatel is the fourth-largest supplier of equipment for the telecoms industry. The company has significant market shares in the digital subscriber line (DSL), optical transmission, and wireless infrastructure equipment sectors. Alcatel is also more diversified than its peers in terms of activities. About 75% of the company's revenues stem from the capital expenditures of telecoms operators, with the rest accounted for by call-center systems, telecoms equipment for the corporate sector, railway signaling, and satellite technology.

Alcatel derives its sales from:


Fixed communications (42% of sales); includes fixed networks, optical networks, fixed solutions and components, and subsystems for fixed networks;
Mobile communications (27%); includes mobile networks, mobile solutions, and wireless transmission; and
Private communications (32%); includes enterprise solutions, space solutions, transport solutions, integration and services, and railway signaling. The fixed and mobile communications segments primarily address the telecoms carrier market, for which Alcatel acts as a system supplier. The private communications segment serves end-user customers.

Alcatel undertook a series of strategic initiatives in 2004 to stem losses in various divisions, including the participation of its mobile handset business in a joint venture with TCL Communications Technologies Holdings Ltd., the contribution of its fiber optics and communication cable businesses to a joint venture with Draka Holdings N.V., and the sale of its power system business.


Table 1 Alcatel Sales And EBIT By Business
 
Sales

EBIT*

EBIT margin (%)

(Mil. €)   2003¶   2004   % of total   % of growth   2003¶   2004   2003¶   2004  
Fixed communications 5,364 5,131 42 (4) 155 429 3 8
Mobile communications 2929 3301 27 13 315 401 11 12
Private communications 3627 3965 32 9 123 235 3 6
Other 16 0 N/A N/A (144) (87) N/A N/A
Intragroup sales (330) (132) (1) N/A N/A N/A N/A N/A
Total 11,606 12,265 100 6 449 978 4 8
*Not operating-lease adjusted. ¶Restated to reflect the contributions to joint ventures of the group's fiber optics and mobile handset businesses and the sale of its power systems business. N/A--Not applicable.


In 2004, Alcatel's main markets were Western Europe (45% of fourth-quarter 2004 sales), encompassing notably France and Germany; other Europe (7%); North America (11%); Asia (14%); and Rest of World (23%). Primary customers are former incumbent telecoms operators, who account for almost 80% of the company's customer base. The remainder comprises alternative carriers, internet service providers (ISPs), businesses, and consumers. Alcatel's customer base is quite diversified, with the 10 largest customers accounting for 24% of sales and no single customer accounting for more than 10% of sales.

Various institutional investors publicly own Alcatel. Together, these investors own the majority of the company's shares, but no single investor holds more than 5%. Alcatel's shares are listed in Paris and sold as American depository shares in New York.





Business Profile


Industry characteristics

The communications and data networking hardware equipment industry is estimated to be a $300 billion market. Key in driving sales in this market is capital expenditures by telecoms operators. The latter hinge on demand for fixed and mobile communications--particularly requirements for higher bandwidth to run more powerful applications, creating the need for new network build-outs and upgrades--and continued growth in mobile subscribers worldwide.

The industry is highly competitive in terms of pricing, functionality, service quality, the timing of development and introduction of new products, customer service, and vendor financing terms. Increasingly shorter product lives explain why vendors invest 15%-20% of their sales in R&D. At the same time, the strong technological content associated with the transmission of fixed and mobile communication services translates into high barriers to entry. For similar technologies or solutions, price competition can become very aggressive, particularly when orders dry up, as they did in 2001 and 2002. In the current environment, a company with strong financial resources, critical mass, and a streamlined cost structure is better positioned to withstand low prices for an extended period of time.

The main weaknesses of the telecommunications equipment industry are:


Its dramatically lower sales volume compared with peak levels in 1997-2000 and the ensuing increased aggressiveness, resulting in pricing pressure estimated at 10%-15% per year on average;
The structural decline of the (public switched telephone network (PSTN) legacy in favor of IP end-to-end technologies;
The ability of telecoms operators to dramatically curtail investments if needed (as in 2002 and 2003), without disrupting service;
The cyclical effects of economic conditions; and
Ongoing major technological changes, such as the threat posed by the convergence of fixed and mobile technologies, the transition to IP technologies, and fixed-to-mobile substitution. In this regard, a lower but more sustainable capital intensity ratio is essential for creating stability in the equipment sales cycle.



Competitive position

Alcatel is one of the top suppliers of telecoms equipment worldwide, strongly positioned in wireline communications equipment and--more recently--boasting a rapidly expanding presence in wireless equipment. A small number of manufacturers compete aggressively for contracts around the world. Apart from Alcatel, key players in the wireline sector are Fujitsu Ltd., NEC Corp., Cisco Systems Inc., Lucent Technologies Inc., Nortel Networks Corp., and Siemens AG. In wireless infrastructure, the main players are Ericsson (Telefonaktiebolaget L.M.), Lucent, Motorola Inc., Nokia Corp., Siemens, Nortel and Alcatel. These companies enjoy economies of scale, substantial R&D resources, international distribution channels, and longstanding relationships with major telecoms operators. At the same time, Alcatel may be threatened over the long term by the increasing number of strong Asian players, such as China's Huawei Technologies, with an efficient labor-intensive cost structure and an aggressive price strategy in an already very crowded market.

Alcatel has a strong position in fixed communications, which accounted for 42% of sales and produced 8% operating margin in 2004. The group is the world leader in the $5.6 billion DSL market, with 38% market share, and is firmly established in the optical transmission segment. Alcatel's fixed communications business is nevertheless under strong pressure, as reflected by the 4% fall in sales in 2004 (10% drop if unadjusted for asset disposals), as a result of carriers' transition to next-generation networks from narrowband switching, excess supply capacity, and fierce pricing competition. Against this backdrop, the DSL segment--one of the fastest growing--has recently experienced lower-than-expected growth and harsh pricing pressure. On a more positive note, the optical transmission market has begun to stabilize after sharp cuts in telecom spending over the past three years due to excess carrier network capacity. In October 2004, Alcatel also won a strategic $1.7 billion, five-year contract from U.S.-based SBC Communications Inc.--a major telecoms service provider--to build SBC's network for the delivery of triple-play services to 18 million households.

Although a relatively late entrant to the mobile communications market (27% of group sales and 12% operating margin in 2004), Alcatel has nevertheless benefited from substantial growth (sales up 12% in 2004) in this segment. Alcatel is primarily focused on global systems for mobile, or second-generation (GSM or 2G), and general packet radio service (GPRS or 2.5G) technologies, which it sells in emerging markets, where the group typically benefits from the support of the French--and to a lesser extent the German--export credit agency. Although potentially volatile, emerging markets provide Alcatel with more growth than mature markets and the opportunity to reap the benefits of the industry's current primary growth vector. At this stage, the lack of meaningful revenues derived from universal mobile telecommunications systems (UMTS or 3G) equipment has not proved to be a major problem for Alcatel as customers in emerging markets are still spending heavily on GSM technology.

Alcatel has also a strong position in private communications (32% of group sales and 6% operating margin in 2004), where it develops products and applications marketed directly to midsize and large communication-intensive businesses. The division operates in fields such as transportation, oil & gas, utilities, banking and finance, security; and government agencies. Offerings in this segment also include a range of space solutions, such as high-speed voice, data, and multimedia communications services. Currently experiencing comfortable 9% growth, this business has enabled Alcatel to diversify from its wireline and wireless carrier businesses. By diversifying, Alcatel has effectively offset the contraction in orders for fixed-communications equipment, particularly in the U.S., resulting in a slower decline in sales for the company than for competitors in the U.S. In its latest move to diversify, Alcatel merged its space activities with those of Italy-based aerospace and defense group Finmeccanica SpA, to cover industrial, operational, and service activities.



Trading environment

The telecoms equipment industry stabilized in 2004, after weathering its worst crisis to date in 2001-2003. After phenomenal growth from 1997 to 2000, Alcatel's sales fell year-on-year by about 19% in 2001, 35% in 2002, and 24% in 2003 for two main reasons: severe capital-spending cuts by European telecoms services providers after the auction of 3G licenses drained more than €100 billion in cash from their resources, leading to very high leverage; and excess network capacity build-out, particularly in the U.S. Adverse economic conditions added to the gloomy landscape. The sharp slump in sales in a very short timeframe prompted intense price competition between the main vendors, further exacerbating the decline in prices and sales.

In the face of this steep downturn, equipment suppliers substantially reduced their cost structures, concentrating on aggressive restructuring programs between 2002 and 2004, including cutting headcount by more than 50% compared with peak levels. At the same time, equipment suppliers put in place initiatives to release as much cash as possible--primarily through the unwinding of working capital and asset disposals--in order to cover negative cash flow from operating losses and restructuring charges. Alcatel reduced its cost base by more than 50% during this period while significantly lowering its cost break-even point. In addition, the group generated about €6.8 billion in cash from unwinding of working capital in 2001-2003. This cash, together with disposals of various under-performing operating assets and financial stakes, helped Alcatel cover restructuring charges of about €4.9 billion in the same period and contributed to the group's current high cash balances.

Fiscal 2004 was a year of progress toward stabilization for the wireline equipment sector and of strong recovery for the wireless equipment market. Wireline equipment sales contracted a moderate 4% in 2004 after a double-digit drop one year earlier. The mobile systems market is estimated to have grown by about 18% in dollar terms during 2004, while Alcatel's mobile communications sales increased by about 13% in the same period. The overall improved trading conditions resulted from the much stronger balance sheets of telecoms operators after considerable debt reduction during 2004, the catch-up effect on previous under-investment by operators currently facing increased competition from cable and alternative network operators (altnets) in the triple-play space, and the expansion of mobile communications technologies in developing countries.



Industry outlook

Standard & Poor's believes that the global telecoms equipment market will grow at low-to-mid single-digit rates (in dollar terms) during 2005, with low-single-digit sales growth in wireline and strong--albeit lower than in 2004--wireless spending. In wireline, the growth in high-speed internet, data traffic, and more powerful applications such as interactive television and video on demand will drive an upsurge in demand for bandwidth. In wireless, this growth will be supported by the unrelenting expansion of GSM mobile telephony in emerging markets as the number of mobile subscriptions worldwide is expected to increase from 1.7 billion in 2004 to more than 2.5 billion by 2009. Standard & Poor's has noted, however, a recent increase in carrier consolidation activity, particularly in the U.S. among large operators, , which could translate into material changes in the market shares of suppliers in certain technologies.






Financial Policy: Below average

Against the severe market downturn in 2000-2003, Alcatel's financial policy has centered on streamlining its cost structure, improving liquidity to offset any liquidity risk, and reducing debt. The group has generated high cash amounts through unwinding working capital and asset disposals. These moves have translated into a solid gross cash position for Alcatel of €5.1 billion at Dec. 31, 2004, equivalent to a net cash position of €752 million. The group's financial debt totals €4.4 billion, with an unchallenging maturity profile (see capital structure and financial flexibility section under Finance Profile below). Alcatel has decided it will not distribute a dividend in 2005. Standard & Poor's expects Alcatel to maintain a solid net cash position at all times, with sufficient liquidity to cover debt maturities for at least three years, and conservative gross debt leverage.





Financial Profile: Below Average


Accounting

All figures in the present report are prepared in accordance with French GAAP. From the first quarter of 2005, however, Alcatel will report financial results according to International Financial Reporting Standards (IFRS). The impact of the transition from French GAAP to IFRS on the group's financial statements does not change Standard & Poor's view that the group has a sound financial profile and that accounting changes do not modify the group's ability to generate free cash flow generation. The most significant differences in the transition to IFRS include retroactive capitalization of development costs and their amortization, the cessation of goodwill amortization, the recognition of the fair value of outstanding employee share options and booking of related costs, the recognition of financial instruments at fair value on the balance sheet, and the establishment of a new definition of cash and cash equivalents.

In total, the transition to IFRS has triggered the following main differences:


Table 2 Alcatel 2004 Key Financial Figures Under French and IFRS GAAP
(Mil. €)   French GAAP   IFRS GAAP   Difference  
Operating profit 978 1,181 203
Operating margin (%) 8 9.6 1.6
Net income 281 600 319
Shareholder's equity 3,368 4,989 1,621
Operating working capital 612 424 (188)
Financial debt 4,359 4,596 237
Net cash 752 671 (81)




Profitability and cash flow adequacy

Alcatel has downscaled dramatically its cost structure to confront in the plunge in revenues in 2001-2003. The company's sales in absolute terms decreased by about 61% over this period following weak trading and disposals of underperforming operating businesses. The group responded by cutting operating expenses by about 65% (including asset disposals) over the same period, including a reduction in headcount to 55,000 from about 132,000 four years earlier. These measures enabled the group to reduce considerably its break-even point, generate a gross margin of 37% and a net operating margin of 8% (French GAAP) in 2004, and restore positive funds from operations.


Table 3 Alcatel Profitability Analysis
(Mil. €)   2000   2001   % change 2000-2001   2002   % change 2001-2002   2003   % change 2002-2003   2004   % change 2000-2004  
Sales 31,408 25,353 (19) 16,547 (35) 12,513 (24) 12,265 (61)
Cost of sales 22,193 19,074 (14) 12,186 (36) 8,415 (31) 7,690 (65)
Gross margin (%) 29 25 -- 26 -- 33 -- 37 --
Operating expenses 6,964 6,640 (5) 5,088 (23) 3,766 (26) 3,597 (48)
Restructuring costs 143 2,124 -- 1,474 -- 1,314 -- 304 --
Operating margin (%) 7 (1) -- (4) -- 3 -- 8 --
                   


With room for improvement, Alcatel's operating margins are moderate overall. It is difficult to compare the group's profitability directly with that of peers given Alcatel's diversification into a number of vertical markets such as space solutions, services, and submarine activities, which have less software needs and produce lower gross margins. Excluding vertical markets, Alcatel's carrier and enterprise businesses generate gross margins of 41%, which are closer to those of peers. At the same time--despite very significant cost cutting over the last two years--Alcatel's operating leverage is relatively high for its level of sales, leaving room for further cost cutting.

Alcatel has set a medium-term target for an operating margin of about 10% (French GAAP). In order to achieve this objective, the group is aiming to trim by 5% its selling, general, and administrative expenses, along with R&D costs, for which it had taken restructuring provisions of €662 million at year-end 2004. On this basis, Standard & Poor's considers that Alcatel is well positioned to deliver its profitability targets and to continue to produce positive FFO. Given Alcatel's operating leverage, anticipated cost efficiencies, market position, and the industry's improved sales environment, the company should be in a position to improve its free cash flow generation during 2005, even amid a stable sales scenario.



Capital structure and financial flexibility

Alcatel's capital structure was reasonably robust at Dec. 31, 2004, reflecting:


Gross cash of about €2.8 billion and marketable securities of €2.3 billion;
Good liquidity and moderate capital intensity, with a fairly even breakdown of the group's asset base between cash and equivalents, highly liquid receivables and inventories, and fixed assets;
Adequate capitalization, with shareholders' equity accounting for 20% of the balance sheet (25% under IFRS).
Gross financial debt of about €4.36 billion at Dec. 31, 2004. At Dec. 31, 2004, Alcatel's debt was composed of €2.7 billion in senior unsecured notes, €1 billion in convertible bonds, €411 million in bank loans, €45 million in capital leases, and €139 million in accrued interests. In addition, Alcatel had contractual obligations including operating leases for €546 million and an excess of pension benefit obligations over the fair value of plan assets of about €1.14 billion at Dec. 31, 2004. In calculating ratios for Alcatel, Standard & Poor's increases the company's debt levels by including the net present value of operating leases (equivalent to €329 million) and post-tax pension funds.

At Dec. 31, 2004, Alcatel also had:


Purchase obligations of €221 million;
Off-balance-sheet commitments related to certain guarantees given to customers for contract execution, including performance bonds and guarantees relating to the maximum intra-day bank overdraft allowed to group subsidiaries under the cash pooling agreement with certain banks, for a total €3.3 billion;
Guarantees and contingent commitments of €1.7 billion; and
A financial obligation of €200 million relative to a carry-back receivable, in addition to its securitization program (see vendor financing section below). Standard & Poor's does not adjust for Alcatel's commitments and contingent liabilities, given the low probability that they will be realized.



Vendor financing

At Dec. 31, 2004, net of reserves, Alcatel had provided customer financing of approximately €253 million and had outstanding commitments to provide further direct loans or financial guarantees for approximately €92 million. Standard & Poor's deems this exposure of €345 million (€810 million in 2003) as low and manageable for the company. In addition, with the incorporation of the securitized vendor financing (SVF) program on the group's balance sheet (under IFRS GAAP) and the cancellation of the customer-loan program, Alcatel's vendor finance exposure is largely reflected on balance sheet.


Table 4 Alcatel Peer Comparison
(Mil. €)   Alcatel   Ericsson (Telefonaktiebolaget L.M.)   Lucent Technologies Inc.   Motorola Inc.  
Corporate credit rating BB/Stable/B BBB-/Positive/A-3 B/Positive/B-1 BBB/Positive/A-2
Revenues 12,265 14,444 7,030 24,144
EBITDA 1,459 3,527 1,543 3,011
Funds from operations (FFO)* 409 3,157 1,132 2,413
Capital expenditures 380 268 72 381
Free operating cash flow (669) 2,192 365 1,983
Total debt* 4,688 3,561 5,095 4,559
Cash 5,111 8,379 2,840 8,254
Net debt* (423) (5,762) 2,255 (3,695)
Net funded status of post-retirement obligations (1,143) (1,132) (3,744) (1,315)
EBITDA margin (%) 12 26 22 12
FFO/total debt (%)* 9 89 22 53
Total debt/EBITDA (x)* 3.2 1.0 3.3 1.5
*Operating-lease adjusted.



Table 5 Alcatel Financial Statistics
 
--Year ended Dec. 31--

(Mil. €)   2004   2003   2002   2001   2000  
Sales 12,265 12,513 16,547 25,353 31,408
EBITDA* 1,459 2,310 306 922 3,441
Income from operations 978 332 (727) (361) 2,251
Funds from operations (FFO)* 409 (570) (1,801) (550) 2,145
Capital expenditures (380) (253) (490) (1,748) (1,834)
Free operating cash flow (669) 191 2,233 (1,203) (3,079)
Total debt* 4,688 5,734 6,171 7,751 7,396
Cash 5,111 6,269 6,109 5,013 3,060
Net debt* (423) (535) 62 2,738 4,336
EBITDA/sales (%)* 12 18 2 4 11
Operating income/sales (%) 8 3 (4) (1) 7
FFO/total debt (%)* 9 (10) (29) (7) 29
Total debt/EBITDA (x)* 3.2 2.5 20.2 8.4 2.1
Year-end financial statements are audited, consolidated, and prepared according to French GAAP. *Operating-lease adjusted.







Group E-Mail Address

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[ariane] 23/4/2005 11:24

China to buy satellite from Alcatel

www.chinaview.cn 2005-04-21 20:06:11



    BEIJING, April 21 (Xinhuanet) -- The China Satellite Communications Corporation signed a 100-million-euro deal here Thursday with French company Alcatel Space to buy a powerful communications and live radio and TV broadcast satellite from the French firm.

    Pascale Sourisse, chairwoman of the board of the French firm, said the satellite, known as "ChinaSat 9" Direct Broadcast Satellite, will be fitted with 22 Ku band transponder, allowing easy reception of television programs across China.

    Zhang Hainan, president of the Chinese firm, said the satellitewill be used for the live TV broadcast of sports programs during the 2008 Beijing Olympic Games.

    The signals beamed from the satellite will cover the whole of China, which means remote areas in China where people still cannotreceive TV signals will be able to watch television programs afterits scheduled launch in mid-2007 atop a Chinese-made rocket, said Zhang.

    With a satellite dish of 0.45 meters to 0.6 meters in diameter,the satellite will be capable of relaying 150 to 200 different programs with standard and high definition resolution, said the Chinese firm.

    According to the contract signed by Zhang and Pascale Sourisse,the satellite will be 4,500 kg in weight at the time of launch scheduled for around July of 2007 with a power capacity of 11,000 watts and a life span of 15 years.

    Alcatel will also be responsible for making the satellite compatible with the Chinese rocket, orbital positioning and in-orbit testing as well as offering its Chinese partner a satellite simulator, according to the deal.

    Sourisse said the latest deal, together with the successful launch of Alcatel-made APstar VI on April 12 by a Long March 3B rocket from China, indicates the cooperation between Alcatel and China in the field of satellites is entering a more prosperous stage.

    Alcatel began its cooperation in 1984 by providing parts for a Chinese satellite, and it sold a whole satellite, SINOSAT 1 satellite, in 1998 to the China Academy of Space Technology (CAST),which was launched in July 1998 and is still in service.

    Investment by Alcatel in China has now totaled about 1 billion US dollars, involving telecommunications, space, and urban transport automation.

    Alcatel Space, a wholly owned subsidiary of Alcatel, is the world's third largest satellite manufacturer and the largest in Europe. Enditem

[ariane] 23/4/2005 09:58

Wednesday April 20, 1:50 PM

FOCUS: Alcatel's No. 2 Brings Pragmatism, Global Outlook

(This item was originally published Tuesday)

By Brian Lagrotteira

Of DOW JONES NEWSWIRES

PARIS (Dow Jones)--With the number of viewers watching television over Internet technology set to swell fivefold to as many as 100 million by 2010, Mike Quigley knew Alcatel SA (ALA) couldn't risk losing ground in a market it has led.

Alcatel, the world's largest provider of high-speed Internet equipment, has increasingly been competing with Microsoft Corp. (MSFT) to supply software for showing TV over Internet protocol, as the technology is known, but realized the ubiquity of the world's largest software company made it imperative to cut a deal or risk losing customers.

So Quigley, named Tuesday as the company's new chief operating officer, proposed in his previous role as head of Alcatel's fixed-line business and North American operations that Microsoft would provide the software that lets viewers hop from channel to channel, while Alcatel would focus on integration systems that help get programs to the TV and the infrastructure for the telephone companies.

"Why should we be going head to head rather than co-operating" Quigley told Dow Jones. "It's a nascent business. We're breaking new ground."

Although some said Alcatel was effectively throwing in the towel, they also said it was a pragmatic deal that better positioned Alcatel to exploit the booming market for TV, Internet, voice and music in homes and offices.

Now Quigley is closer to the company's helm of a company which is under pressure to find a successor to 67-year-old Serge Tchuruk and, more broadly, as consolidation among telephone operators is forcing suppliers to consider big deals themselves.

Alcatel doesn't rule out the type of mega-merger it considered a few years ago with Lucent Technologies Inc. (LU), people familiar with the situation have said, but it's been focusing on smaller, technology-specific acquisitions.

Alcatel named U.K.-born Quigley, who is of Irish extraction but raised in Australia, as its new chief operating officer Tuesday, highlighting at least symbolically how in the past 10 years the Paris-based company has grown from a French-concentrated conglomerate to a global telecoms equipment group with operations in 130 countries.

Tchuruk, who has led the company since 1995, has proposed extending his mandate as chairman through mid 2008, easing a succession quandary that has hung over the company in recent months. He steps down as CEO in 2006.

As second-in-command, 52-year-old Quigley is Tchuruk's heir apparent but analysts have questioned whether Alcatel would actually hire a non-Frenchman to lead the company, whose 9% stake in French defense firm Thales SA (12132.FR) and position as one of the country's largest industrial firms gives it particular clout in corporate France.

Quigley doesn't speak French and Alcatel hasn't said whether the Australian-accented manager will be named CEO next year. Quigley's been at Alcatel 34 years, having started as an intern in 1971 and an employee in 1976.

The new COO has been responsible for the turnaround of Alcatel's fixed-line business, which supplies around 40% of the world's high-speed Internet equipment and has focused on triple-play technology - industry-speak for the equipment that enables consumers to watch television, surf the Internet and make calls over the phone cables.

This strategy and cost-cutting have boosted the division's operating margin to 8.4% last year from 2.9% in 2003, well above the group's average of 3.8%. Revenue, however, fell 4% to EUR5.13 billion from EUR5.36 billion, according to the company's accounts under French GAAP, amid fierce pricing pressure.

Quigley said that when Alcatel started pushing so-called Internet protocol, or IP, platforms for telecoms operators, it was dwarfed by industry leaders Cisco Systems (CSCO) and Juniper Networks Inc. (JNPR). "The biggest challenge was how to get us taken seriously in IP," he said.

So he continued investing in fiber optics and rather than developing certain technologies he acquired smaller companies to fill in the holes in Alcatel's portfolio, such as Silicon-Valley based router company Timetra in 2003 and Spatialwireless in 2004, which gave Alcatel T-Mobile International AG (TMO.YY) and Cingular Wireless (CIW.XX) as clients on the mobile side in the U.S.

He said a strategy that focuses on both equipment and services, rather than, say, Lucent Technologies' focus on integration, has been key to deals like the $1.7 billion agreement with SBC Communications (SBC), the first telecoms operator to try out the Microsoft-Alcatel offer.

By 2008, as many as 60 million households around the world - mostly in North America and Europe - will use Internet television technology, with that number growing to as high as 100 million by 2010, according to the top end of estimates compiled by Westhall Capital, an independent brokerage specializing in technology telecoms.

As COO, though, Quigley will have more than just high-speed Internet cables on his mind.

One strategic decision he'll have to weigh is how to capture a greater share of the defense market that Alcatel executives believe is increasingly dependent on telecoms technology and could diversify the company's growth.

The company is increasingly seeking airport operators, hospitals and utilities as its clients, as they hire Alcatel to provide security technology.

The company is considering a deal that would give it as much as 30% of Thales SA (12132.FR), Europe's largest defense electronics firm, in exchange for greater partnerships in certain sectors, people familiar with the situation have said.

Investors, however, have criticized the idea, saying it would reverse Alcatel's risk profile from a pure telecoms company to an industrial conglomerate and that could limit its value.

[maywillow] 21/4/2005 14:53

PARIS (AFX) - Alcatel SA said it won a 5.5 mln eur contract with
privately-held Polish IT and telecommunications group Sprint to extend the video
monitoring system in the city of Warsaw.
Under the terms of the contract, Alcatel will install a 140 km optical fibre
network, which will transmit video images from cameras to the control centre.
For its part, Sprint will deliver, install and commission the video equipment.
The extension should be in place by the second half of 2006, the companies
said in a joint statement, adding that it should help the Polish capital combat
violence and vandalism.
[e-mail]
sr/jsa

[grupo guitarlumber] 19/4/2005 14:41

PARIS (AFX) - Alcatel said it appointed Mike Quigley, CEO of Alcatel USA, as
chairman and chief operating officer, replacing Philippe Germond, who had
already resigned.
Quigley will report to CEO Serge Tchuruk and will have particular
responsibility for the groups telecoms activities, Alcatel said in a statement.
Alcatel recently split the role of chairman and chief executive to create a
two-tier structure and Germond is understood to have been unhappy at Tchuruk's
decision to remain as chief executive until 2008.
Germond's resignation was also believed to have been triggered by Alcatel's
plans to build up its ties with Thales, thus gaining a large presence in the
defence sector to balance its substantial exposure to telecoms networks.
[e-mail]
mrg/vs

[maywillow] 18/4/2005 21:35

WSJ: Tchuruk picks Quigley to be next Alcatel CEO
By Ed Gubbins

Apr 18, 2005 4:12 PM


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Alcatel CEO Serge Tchuruk has picked Mike Quigley, president of both its North American and fixed communications groups, to succeed him as CEO when he steps down next year, according to a report today in the Wall Street Journal.

Two weeks ago, the company's Chief Operating Officer, Philippe Germond--whom many predicted would replace Tchuruk--announced his resignation.

Tchuruk, 67, will be forced to resign the CEO post next year as a result of an age limit set by the company's directors.

Quigley joined Alcatel USA in December 1999 as senior vice president and chief operating officer, eventually becoming CEO of the Texas-based subsidiary of the company headquartered in Paris. Prior to joining Alcatel USA, he was general manager of Alcatel Australia. He holds two degrees from the University of New South Wales: one in physics and mathematics and one in electrical engineering.

The board is expected to consider Quigley's appointment at a meeting tomorrow, when it will also accept Germond's resignation, the Journal reported.