Alcatel Stock Price Defies the Facts

Updated from 12:26 p.m. EDT

Shares of telecom equipment maker Alcatel-Lucent (ALU Quote) rose in early trading Tuesday as investors shrugged off a ninth consecutive quarterly loss.

Alcatel-Lucent's shares climbed 3.8%, to $2.71, outpacing the broader retreat in tech stocks that saw the Nasdaq fall 0.55%.

The Paris-based company, which posted its results before market open, beat analysts' revenue estimate with sales of $4.8 billion, but suffered a widening first-quarter loss. Alcatel-Lucent reported an adjusted net loss of 18 Euro cents, or 24 cents a share, widening the loss of 7 cents in the prior year's quarter. Analysts surveyed by Thomson Financial were looking for a loss of 9 cents a share.

Confronted with weak demand, however, Alcatel-Lucent's sales fell 7% year-over-year. For the full year, Alcatel-Lucent has forecast a 10% decline in revenue compared to 2008, but expects to reach a break-even point on adjusted earnings.

Alcatel-Lucent, far from alone in its troubles, faces stiff competition from Ericsson (ERIC Quote), Nokia (NOK Quote) and Chinese giant Huawei, which has been aggressively targeting the Western market. The global economic meltdown has already contributed largely to rival Nortel (NT Quote) spiraling into Chapter 11, underlining the challenges facing the telecom sector.

With telecom firms AT&T (T Quote), Verizon (VZ Quote) and Sprint (S Quote) cutting budgets, gear suppliers like Alcatel are having to work much harder to drive revenue and control costs.

Alcatel-Lucent laid off 290 employees in the first quarter and intends to cut another 610 workers, according to its most recent plan. In total, Alcatel-Lucent aims to eliminate 16,500 employees and contract workers by the end of 2009.