AT&T giving Ericsson more business Alcatel-Lucent less for 3G buildout

Alcatel-Lucent claims ‘significant’ portion of AT&T 3G buildout
Firm blasts report that it has lost share to Ericsson

It’s been a tough week for Alcatel-Lucent. Twice this week the company has been compelled to issue formal statements; first addressing speculation about CEO Pat Russo’s future at the company and today addressing a reported diminished interest in AT&T Mobility’s 3G buildout.

A Financial Times story published today reported that Alcatel-Lucent could be losing some of its 3G business with the No. 1 U.S. carrier to L.M. Ericsson. The paper, citing unnamed sources close to the situation, reported that Alcatel-Lucent had delayed in delivering W-CDMA equipment to AT&T Mobility, prompting Ericsson to increase its share of the contract.

“We continue to be a critical W-CDMA supplier to AT&T,” the company said in a statement.

“Our market share has remained relatively stable and we continue to work to meet our commitments to maintain our market share. To speculate otherwise is both inaccurate and misleading,” the statement continued. “We have signed a significant part of the W-CDMA contracts awarded since the beginning of 2007.”

The Financial Times reported that Ericsson’s share of the contract would now exceed 50% of the entire project. The original $2 billion contract in 2004 awarded about $900 million to Ericsson, $700 to Lucent and $400 million to Siemens, it reported.

Alcatel-Lucent has struggled of late on Wall Street, having sent three profit warnings this year that downgraded revenue forecasts, and this summer announced the departure of two senior executives. Most of the remaining top leadership comes from Alcatel, with the exception of former Lucent CEO Pat Russo, who is now head of the combined company.

Since marking a high of more than $15 per share at the beginning of 2007, Alcatel-Lucent shares sunk below $9 last month and dropped a little more than 1% on today’s news to $10.10.
Alcatel-Lucent claims ‘significant’ portion of AT&T 3G buildout - RCR Wireless News

 

I think Alcatel/Lucent is still suffering from the buyout/merger & they have too many issues keeping them from delivering and now that AT&T seems in a big rush on their 3G buildout to make it look good to customers & investors, they want stuff Now (I like that part of the Instant Gratification to get it done now).

I think from what I hear about the Ericsson equipment, they may be making a better choice in the end with their equipement.

 

UPDATE: Alcatel-Lucent Defends WCDMA Position With AT&T

Franco-American telecommunications equipment maker Alcatel-Lucent, Friday said it remains a critical supplier of WCDMA equipment to AT&T and is meeting its commitments to maintain market share.

Alactel-Lucent's comments came after a report in the Financial Times suggested the French company was set to lose business with AT&T to rival Ericsson.

"Our market share has remained relatively stable and we continue to work to meet our commitments to maintain our market share. To speculate otherwise is both inaccurate and misleading," Alcatel-Lucent said in a statement.

Michael Coe, a spokesman for AT&T declined to comment on the report.

The Financial Times report delivered a fresh blow to Alcatel-Lucent's share price which has fallen over 34% since the start of the year on the back of three profit warnings. In morning trading in Paris, Alcatel-Lucent stock was down over 3.5% before clawing back to close down 0.8% at EUR7.15 in an overall stronger market.

Alcatel-Lucent's most recent profit warning on Sept. 13 deepened investor concerns over the recently-merged company and prompted speculation over the future of its chief executive Patricia Russo. The Alcatel-Lucent board issued a statement Tuesday saying reports that Russo's job was on the line were "erroneous speculations."

Russo is due to deliver an accelerated restructuring plan to the board on Oct. 30, the day before the company posts its third-quarter earnings.

In the Sept. 13 warning, Alcatel-Lucent abandoned its full-year revenue growth forecast and said it expects third quarter operating profit to be around break even, blaming deteriorating market conditions in the company's wireless and wireline businesses in North America.

The Financial Times report Friday was not seen as entirely negative for the company, which was created from the November 2006 combination of Alcatel SA of Paris and Lucent Technologies Inc. of Murray Hill, New Jersey.

Analysts at Oddo Securities in Paris said they estimated the AT&T contract to have weak margins and to be relatively insignificant compared to Alcatel-Lucent's overall revenues.

They added that without the contract Alcatel-Lucent would be able to abandon its 3G WCDMA platform and further streamline its overall WCDMA business, helping the new restructuring plan. Oddo has an add rating and EUR8.50 target price on Alcatel-Lucent stock.

UPDATE: Alcatel-Lucent Defends WCDMA Position With AT&T