Alcatel-Lucent (ALU 13.26) posted an unexpected loss in the second quarter, hurt by merger integration costs and unfavorable product and geographic mix. Its shares tumbled on the news, losing more than 8% in pre-market trading.
The company, which was formed last year by the merger of France-based Alcatel and New Jersey-based Lucent, has seen its stock fall roughly 7% since the beginning of the year. While we maintain an Overweight rating on the Telecom sector, Alcatel-Lucent has posted a string of disappointing results and continues to lose ground to rivals such as Nortel Networks (NT 22.35) and LM Ericsson (ERIC 38.59) due to integration effects and fading legacy businesses.
For its most recent quarter, Alcatel-Lucent reported an adjusted loss of 336 million euros, or (0.15) euros per share, compared with a profit of 302 million euros, or 0.13 euros per share, in the same period last year. That equates to a loss of $460 million, or ($0.20) per share. Revenue fell 3.6% year/year to 4.33 billion euros, or $5.93 billion.
The results fell short of the consensus estimate. Analysts on average were expecting a second quarter profit of $0.02 per share on sales of $5.8 billion.
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