Alcatel-Lucent plunges on warning

Alcatel-Lucent plunges on warning

Shares in Alcatel-Lucent fell by as much as 14 per cent in Paris after it shocked the market with its third proit warning this year. The group, formed last year from the E11.1 bn merger of France's Alcatel and Lucent of the US, said it was forced to slash its forecast for full-year revenue growth to zero as a result of a slowdown in capital spending among its wireless customers in North America.

The group had counted on higher volume sales to compensate for the aggressive price cuts it has undertaken to compete with Ericsson for clients. Alcatel said challenging conditions in North America meant it now expected 2007 revenue growth “to be flat or slightly up” at constant exchange rate. It added that third-quarter operating income was expected to be “around break-even”.

It sounded its first profit warning in January, saying merger-related costs and uncertainty over product integration had hurt profits. This was followed by a sales warning in February, when it said it expected a revenue decline for the first quarter. The misery continued last month after the group announced a largest-than-expected second quarter loss.

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