Hey, Joe Fool! Your spinster Aunt Alcatel
That's the big news that has French telecom equipment maker Alcatel down 13% today. The lesser news, strangely, doesn't seem so bad. For the year, sales increased less than 6% against fiscal 2003. But if not for the declining value of the U.S. dollar dragging down results (by making each dollar of revenues translate into fewer and fewer euros), sales would have increased by nearly 10%.
As for profits -- well, they were pretty good this year, relatively speaking. Last year, the company posted losses equivalent to $1.97 per U.S.-traded American Depositary Receipt. This year, the company reversed that and earned a profit of $0.28. What's more, it claims to have generated positive free cash flow for fiscal 2004, although it didn't provide a hard number.
Even the other "bad" news of the day wasn't so bad, objectively speaking. For one thing, Alcatel managed to boost its gross margins by a full 190 basis points over last year, to 37.3%. While that's still short of the kinds of margins that competitors Lucent
Finally, looking toward the future, Alcatel advised that it's targeting 3%-5% revenue growth and double-digit earnings growth in fiscal 2005. The revenue growth number is about half of what Wall Street had been hoping to hear, and that helps explain the outsized sell-off this morning, but double-digit earnings growth in the troubled telecom equipment sector is really nothing to complain about. I'm sure that shareholders of peers JDS Uniphase
What else is new in the world of telecom? Read the following and find out.
- SBC Courts AT&T, Scares Leucadia, Rips Jefferies
- Verizon's Horizon
- JDSU's Ugly Pair o' Twos
- Is Lucent Ready to Prosper?
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Fool contributor Rich Smith holds no position in any company mentioned in this article.