I imagine that Pat Russo, chief executive of telecom equipment supplier Alcatel-Lucent
The first-quarter earnings report and future forecast, both of which the company released today, showed again that the turnaround road ahead has no end in sight. Alcatel-Lucent reported another stinging loss this quarter, $282 million, on essentially flat revenue of $6.02 billion. Since its merger, which was consummated in late 2006, Alcatel-Lucent has now posted five straight quarterly losses.
With a revised outlook showing that 2008 will be a flat year for telecom equipment, investors relieved themselves of more Alcatel-Lucent stock this morning, dropping shares more than 5%. More than a year into its turnaround plan, the French-American vendor has acknowledged that it still has a lot of work to do.
To be fair, the market for network infrastructure is tough all around. Though there are bright spots in the expansion of optical networks to support rollouts of new initiatives such as Verizon's
But even looking beyond the general economic climate, signs show that Alcatel-Lucent is struggling to remain competitive. The company apparently got the cold shoulder from AT&T
So cost-cutting and layoffs will continue to be standard fare at the company -- 1,200 more employees were let go in the first quarter on the way to a planned 12,500-head workforce reduction. It's hard for me to tell what the "right size" is in the highly competitive network equipment market, however. Without products and services that clearly distinguish Alcatel-Lucent from competitors, I have a hard time seeing how a turnaround can happen without further, significant restructuring in the company.
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Before he even leaves the driveway on long trips, Fool contributor Dave Mock makes it a rule that no questions about arrival time are allowed. He owns shares of Alcatel-Lucent and is the author of The Qualcomm Equation. The Fool's disclosure policy doesn't care where it's going; it just wants to get there fast.