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Alcatel-Lucent reports sharp cut in net loss, stands by targets

PARIS - Telecom equipment giant Alcatel-Lucent reported a sharp cut in its third-quarter net loss on Thursday and stood by its annual targets despite a worldwide economic downturn.

The French-US company, which earlier this year went through a management shakeup after a series of poor results, also said it would carry out a ‘strategic review’ of its activities.

The group said its third-quarter net loss shrank to 40 million euros (52 million dollars) from 345 million euros in third quarter 2007.

Shares in Alcatel-Lucent soared 21.2 percent in mid-day Paris trade to 2.04 euros on the news.

Chief executive Ben Verwaayen, who replaced Patricia Russo last month, told a telephone conference that the company would ‘announce a complete strategic review at the beginning of December’ aimed at restoring the group to profitability.

‘We need to redfine our strategy, we need to streamline our portfolio,’ he said.

‘We need to eliminate duplications and to be more productive in R and D (research and development).’

He described the company's financial situation as healthy, adding that debt at the end of the year would be substantially lower than the 415 million euros of last June.

Third quarter sales came to 4.065 billion euros, down 6.6 percent from the year-earlier period and 0.9 percent from second quarter 2008, results that Verwaayen said were in line with expectations in a difficult macroeconomic environment.

The company said that for the full year it expected an operating margin of between 2.0 and 5.0 percent of revenues, adding that it had adopted ‘cautious’ sales projections in what it foresaw as a stable global market.

Alcatel-Lucent also disclosed that it was considering ‘the possible sale’ of its 20.8 percent stake in the French electronics group Thales, which has been sought by aircraft maker Dassault and aerospace giant EADS.

It said it would be possible to maintain its current partnership with Thales ‘without necessarily having a capital link with the company.’

In another development, 17 Alcatel-Lucent unions in eight countries issued a statement on Thursday attacking the silence of Russo and the company's former non-exeuctive chairman, Serge Tchuruk, in the face of a union demand that they renounce their severance packages.

‘Madame Russo -- give it up! Mr. Tchuruk -- give it back,’ the statement insisted.

On September 16, unions sent letters to the two former managers, asking them to ‘renounce their indecent golden parachutes.’

They denounced the 6.0 million euros accorded Russo and 5.6 million for Tchuruk as ‘scandalous,’ describing then as ‘failure bonuses.’

Since that letter, the unions contended, Russo and Tchuruk have ‘issued no response’ to the request, which ‘doesn't really surprise us.’