Shaping up

14 January 2003

The group probably has the balance sheet strength to make it through the downturn. However, the shares discount a strong recovery in margins next year. It is too soon to say whether that is realistic.

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Alcatel, the French telecoms equipment maker, said on Tuesday that its fourthquarter sales should grow in the high twenties of per cent when compared with the third quarter.

The company attributed the increase to a strongerthanexpected seasonal pattern and sustained sales mainly in broadband equipment and mobile infrastructure.

Alcatel forecast that it would break even at the operating profit level during the quarter, even after taking E150m of reserves on inventories. It added that cost cutting was proceeding well in line with plans.

The group said it had net cash at the year end, although it did not specify how much. This was thanks to a positive operating cash flow and the gross proceeds of the mandatory convertible bonds issue of E645m.

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