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UPDATE 1-Alcatel-Lucent says no plans to exit mobile

Thu Dec 4, 2008 5:08am EST

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* To remain in mobile telecoms business

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* Will continue to spend on R&D

* CEO comments in response to calls for co to hive off unit

* No comment on Q4 or 2009 outlook

* Stock up 1.28 pct

(Adds details, quotes, background, share price)

By Matt Gil

PARIS, Dec 3 (Reuters) - Alcatel-Lucent (ALUA.PA) is not planning to exit the mobile telecoms business, the French American telecoms gear provider said on Thursday in response to investor suggestions it should hive off the struggling unit.

"It is not true we are leaving mobile," Alcatel-Lucent's new chief executive Ben Verwaayen said at a company presentation on research and development in Paris.

"We are not a beleaguered company," he added.

Nokia (NOK1V.HE), the world's leading handset maker, has said the mobile phone market would be weaker in both the fourth quarter of 2008 and in 2009.

Verwaayen, who used to head BT Group (BT.L), joined Alcatel-Lucent in September to replace Patricia Russo after a string of profit warnings that brought the valuation of the telecoms gear group to one tenth of what it was 16 months ago.

Verwaayen said the group was bent on continuing to invest in research and development in spite of tough trading conditions.

"Not doing innovation is like shooting yourself in the head," he said. "We are not going to cut our lifeline to the future." Verwaayen refused to be drawn on the outlook for the fourth quarter or 2009 saying "that is for Dec. 12."

On Dec.12, Verwaayen is expected to unveil a major strategic review and detail the company's plans to cut costs and halt losses.

Alcatel-Lucent is the third-largest global provider of mobile telecoms gear, behind Ericsson (ERICb.ST) and Nokia Siemens Networks, the joint-venture between Nokia and Siemens AG (SIEGn.DE).

The top three players have yet to give a 2009 mobile equipment market outlook and analysts fear a crash landing next year as operators slash investments to protect their margins.

Alcatel-Lucent's shares have lost 67 percent in the year to date and 55 percent in 2007.

The group now has a market value of 3.8 billion euros ($4.81 billion), barely three times the amount it targeted in annual synergies alone when it was formed in a $34 billion merger in Dec. 2006.

By 0927 GMT, its shares were up 1.28 percent at 1.65 euros. (Writing by Astrid Wendlandt; editing by Simon Jessp)

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