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Alcatel-Lucent says demand to remain strong in U.S.

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CIOL Bureau
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PARIS, FRANCE: Telecom equipment maker Alcatel-Lucent sees no end in sight to booming demand in the United States as major operators invest to keep up with a data overload driven by smartphones and streaming video.

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The company's first-quarter results last week were driven by strong sales in North America, prompting some investors to question whether Alcatel-Lucent was becoming too dependent on the region for growth.

Tim Krause, the company's vice-president in charge of the United States, said operators like AT&T and Verizon had to keep investing because their networks lacked bandwidth to keep up with consumer demand.

"Given the competitive landscape with AT&T and Verizon and the overall shortage of capacity, I would be shocked if they took their foot off the pedal in terms of investments," he said at an investor day held by Alcatel-Lucent on Wednesday.

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Krause, in charge of Alcatel-Lucent's relationship with AT&T, declined to say how many years the U.S. boom would last.

The Franco-American company, which competes with market leader Sweden's Ericsson and China's Huawei,  saw its first-quarter sales in North America jump 40 per cent from a year earlier. Some analysts pointed out that 90 per cent of Alcatel-Lucent's sales growth came from North America in the quarter, with several saying that constituted a risk for the group's future.

AT&T and Verizon alone account for nearly 20 percent of the company's overall sales, and about one-third of the group's revenues come from North America.

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What happens in the United States could go a long way to determining the success of Chief Executive Ben Verwaayen's turnaround plan for Alcatel-Lucent in its third and final year.

On Wednesday, Verwaayen, who was brought in in September 2008 to fix the group after a value-destroying merger, rebutted criticism that the company was too U.S. reliant.

"We are selling where there is demand. Would you want us to do otherwise?" he said.

Surfing the United States is helping Alcatel-Lucent's share price, as some investors bet that the long-struggling company has turned a corner. The shares are up more than 100 percent since the beginning of the year. They closed down 0.6 percent at 4.35 euros on Wednesday

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