By Sam Schechner
PARIS--Alcatel-Lucent SA (ALU.FR) plans to float its
submarine-cable unit on the public market, the network-equipment
maker said Thursday after it narrowed its loss in the second
quarter.
The Franco-American maker of cellular networks and Internet
backbone gear on Thursday said that it is exploring a public
offering of the a minority stake in the unit, dubbed Alcatel
Submarine Networks, in the first half of 2015, in order to give the
unit, which operates ships to lay undersea cables, resources to
expand into the oil and gas exploration business.
Cash raised from the submarine unit, which Alcatel had
previously considered selling outright, could also play a "small
part" in helping company achieve its promise to raise at least 1
billion euros ($1.34 billion) through asset sales, though the
Alcatel now plans to keep majority control, Chief Executive Michel
Combes said.
"ASN is part of the Alcatel-Lucent group," Mr. Combes said on a
conference call with journalists.
The sale of a stake in one of Alcatel's oldest assets--and one
where it is still a global leader--is the latest change for Alcatel
under Mr. Combes, who has for more than a year been working on his
"Shift Plan" to redirect the company's resources to a few
profitable areas, while selling off some assets. The plan has led
to heavy staffing cuts as part of a goal of returning to positive
cash flow in 2015.
Mr. Combes said that one of the main goals of the plan would be
achieved in August, when Alcatel repays a secured loan that it had
received in early 2013, backed by the company's patent portfolio,
as well as some of its U.S-based operating units-a deal that had
caused political outcry in France. The payment will take place on
Aug. 19, the company said.
The Paris-based maker of cellular networks and Internet backbone
routers on Thursday reported a net loss of EUR298 million, or 11
cents a share, compared to a net loss of EUR885 million, or 39
cents a share, a year earlier, when the company took a EUR552
million impairment charge, largely on the value of its
cellular-network business.
Alcatel's adjusted operating income of EUR136 tripled on year,
beating some analysts' expectations as the company focused on
higher-margin business. But the company continued to burn cash,
posting a EUR205 million free cash flow loss in the second quarter,
compared to EUR247 million a year earlier.
Revenue in the second quarter fell 4.7% to EUR3.28 billion, in
part as the company has dropped many low-margin or unprofitable
managed-services contracts to operate networks for phone operators.
The company said that after accounting for the strong euro, revenue
was up 0.7%, and would be up 5% without managed services. The
figures exclude the company's enterprise business, which it listed
as discontinued beginning in the first quarter.
The company's once-struggling wireless unit showed some of the
biggest growth, boosting its top line by 22% to EUR1.30 billion,
driven Alcatel said by high-speed wireless roll-outs in the U.S.
and China. At the same time, company's fast-growing
Internet-routing division stumbled, with revenue falling 10%,
because of what the company said was a difficult comparison against
a strong year-ago quarter.
Write to Sam Schechner at sam.schechner@wsj.com
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