* Share price biggest gainer in CAC-40 index, up nearly 5
* Analysts say results show turnaround plan working
* CFO says working on asset sales
* Free cash flow remains negative
(Adds share price, analyst comment, data)
By Leila Abboud and Alexandre Boksenbaum-Granier
PARIS, May 9 Telecoms network equipment maker
Alcatel-Lucent reduced its first-quarter net loss to
73 million euros ($101 million) from 353 million euros a year
ago, the company reported on Friday, as it cut costs and trimmed
Restructuring costs and lower-margin Chinese mobile
contracts weighed on profitability, but the results showed
progress in the turnaround programme started by Chief Executive
Michel Combes last June.
The firm's shares were up nearly 4 percent at 3.045 euros by
0752 GMT, having opened trading nearly 5 percent higher, making
them the biggest gainers in the French market's CAC 40 index
Combes is aiming for 10,000 job cuts, 1 billion euros asset
sales, 1 billion euros in cost cuts, and a repositioning of the
group on fewer products.
The Paris-based company, which competes with Sweden's
Ericsson, China's Huawei and Finland's Nokia
, has not posted regular profits since it was created
in a transatlantic merger in 2006, hampered by its relatively
small size in mobile and hit by tough competition with low-cost
Chief Financial Officer Jean Raby said the company was
working on "a number of things" on asset sales, and reaffirmed
an earlier target of 1 billion euros of divestments by end-2015.
"The target remains very relevant and we're focused on it,"
said Raby during a conference call with reporters on
Raby said that the firm's Chinese wireless business would
drive the top line, but would weigh on gross margins in the
The firm achieved 143 million euros worth of savings on
fixed costs in the first quarter and posted adjusted operating
income of 33 million euros, reversing a 179 million loss last
Free cash flow remained negative at 398 million euros, while
revenue was up 0.3 percent at 2.96 billion euros. The earnings
were adjusted for the sale of the enterprise business in March.
"These results suggest that the ongoing turnaround at
Alcatel-Lucent continues to gain steam, with both profitability
and cash flow expected to improve strongly this year," analysts
at Liberum said in a note.
It added that the company's products in areas like IP edge
and core routing, optical transport and fixed line access are
seeing strong demand currently, which is expected to continue.
In the last quarter of 2013 Alcatel-Lucent posted its first
quarterly profit since March 2012, with its operating margin
widening to 7.8 percent from 2.8 percent in the final three
months of 2012.
(Writing by Geert De Clercq; Editing by Greg Mahlich)