Alcatel-Lucent S.A's (Alcatel) 1Q 09 revenues were in line with our expectations. However, operating and net performance fell short of our expectations, primarily due to higher-than-expected cost of sales. The y-o-y revenue and earnings decline in the quarter reflected a challenging business environment. We expect continued weakness in the industry in FY 2009 in view of the current economic slowdown. Subsequently, we are likely to revise our estimates downwards…

Alcatel relies predominantly on developed markets in the US and Western Europe (49.1% of FY 2008 revenues). Telecommunication infrastructure spending has been declining in these markets, amidst slowing demand and decelerating economic growth. We expect telecom industry spending to continue to decline in FY 2009, impacting Alcatel’s top-line during the period. However, spending in India, China and other emerging economies is likely to offset this revenue…

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Alcatel-Lucent S.A’s (Alcatel) 4Q 08 revenues were broadly in line with our expectations. However, the company’s earnings fell short of our estimates, primarily due to lower than expected other financial income in the quarter. The y-o-y revenue and earnings decline in the quarter reflected a challenging business environment. We expect continued weakness in the industry in FY 2009 in view of the current economic slowdown, which is greater…