Alcatel Profit Slumps

Revenue rises 18%.
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Alcatel (ALA) posted a drop in first-quarter profit Thursday despite an 18% rise in revenue.

The Paris-based telecom-equipment company, which agreed earlier this month to acquire

Lucent

(LU)

in a so-called merger of equals, made 104 million euros, or 8 euro cents a share, in the quarter ended March 31. That's down from the year-ago 124 million euros, or 9 euro cents a share. The latest quarter included capital gains of 2 euro cents a share, against 5 euro cents a year ago. Revenue rose to 3.07 billion euros from 2.61 billion a year earlier.

The latest-quarter profit was 10 cents (U.S.) an American depositary share, a penny ahead of the Thomson Financial estimate.

"Our vision of the market remains unchanged as we move toward mid year: we expect the carrier market to grow in the mid single digit range for full year 2006," said CEO Serge Tchuruk. "Concerning Alcatel's businesses, we expect full year revenue to grow above the carrier market rate, with a lower growth rate for the second half compared to the first half as previously announced. Second quarter revenues are expected to grow in the mid to high single digit range. In an intensifying competitive environment, we continue to target a slight improvement in our full year operating margin as well as expecting to improve free cash flow for the full year."