Shares in Alcatel-Lucent, the telecoms equipment maker, soared on Thursday amid expectations that its turnround plan may be showing the first signs of success. Shares in the Paris-based company rose 18.5 per cent in morning trading to €2.80 after the company reported a loss of €200m between July and the end of September – significantly smaller than analysts’ estimates.
Under Michel Combes, the new chief executive officer, the company is trying to put an end to a dismal few years when it went through half a dozen restructuring plans and burnt about €700m of cash a year on average, since its ill-fated merger with US-based Lucent Technologies in 2006. Thursday’s gains have added to a vigorous rally that has sent Alcatel-Lucent shares up 177 per cent since the start of the year. Last month, Mr Combes proposed to cut 10,000 of Alcatel-Lucent’s 72,000 jobs globally as part of what he has called “The Shift Plan”, a dramatic downsizing and refocusing that aims to make €1bn in savings by 2015. The company, which makes everything from radio towers to billing software for mobile phones, said on Thursday that it was on track to exceed the top end of its €250m-€300m target in fixed-cost savings for 2013. It also said that it expected the last three months to the end of the year “to be driven by strong seasonal activity”. Mr Combes said: “We are seeing the first positive signs of our new operating model in our day-to-day business.” His comments came after the French manufacturer said that sales during the third quarter of this year were €3.7bn, an increase of 7 per cent on a like-for-like basis compared with the same period last year. That slightly higher-than-expected figure came thanks to double-digit growth in the company’s North American sales. Since Nokia disposed of its handset business to Microsoft for €5.4bn, speculation has swirled in the industry that the Finnish company may make a bid for some or all of Alcatel-Lucent. Mr Combes has said he intends to sell €1bn in assets over the coming years. But on a conference call with analysts on Thursday, Mr Combes would not comment directly, saying only that “we will see in the coming years whether consolidation will take place depending on the conditions in the market”. He added: “My focus is to implement my plan, which will make us stronger regardless of what happens in the industry long-term.”