Alcatel Lucent, the struggling French telecoms equipment maker, delivered a fresh blow to investors today, scrapping its dividend and unveiling disappointing guidance for the year ahead.
The poor figures will raise further questions about the future of Patricia Russo, the head of the group which, nearly two years on from a €30 billion merger, is still failing to deliver the hoped-for results.
The company warned that it expects to incur a loss in the first quarter of 2008 and forecast a below expectation operating margin for the full 2008 year of “the low to mid single-digit range”.
It also posted a €2.58 billion (£1.92 billion) loss for the fourth quarter and scrapped its dividend payment.
Alcatel, the French group, unveiled ambitious tie-up plans with Lucent, the US player, in 2006. The merger was aimed at creating a telecoms powerhouse which, through cost-cutting, could compete more efficiently against its rivals.
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The move was a response to consolidation between the companies’ customers - the telecoms operators. But even before the deal had completed, question marks were raised when Lucent delivered two profits warnings. The group’s woes have been further intensified by increasing competition which has sent kit prices spiralling downward.
As investors lost patience, pressure piled up on Ms Russo and last year she was given a month to present an emergency restructuring plan.
Ms Russo said in a statement that the “the macroeconomic environment has created uncertainty in our markets in the last few months”.
Richard Windsor, an analyst at Nomura, said: “Where are the €600 milion promised in savings for 2007? Looks like they are going in the pockets of customers not in the pockets of shareholders.”
In early trading the stock rose 1.2 per cent to €4.16. However that is down 59 per cent from its level when the two companies merged.