[Barrons] Alcatel Sees Dimmer Q4; Analysts See Struggle For Revenue

Shares of Alcatel-Lucent (ALU) are down 47 cents, or almost 17%, at $2.30 this morning after the company this morning reported Q3 revenue short of analysts’s expectations and gave a downbeat view of the current quarter that confirmed for some analysts their fears the company is struggling to find new sources of revenue.

Revenue in the three months ended in September fell 0.7% to �3.8 billion, yielding EPS of �0.08 per share.

Analysts had been modeling �3.99 billion and �0.04 per share.

CEO Ben Verwaayen said the company was well underway in its “transformation,” one what will produce cost savings of �200 million next year.

However, “For the remaining part of 2011, given these market uncertainties, and selective spending from our customers, especially in Europe, we now expect weaker revenues there than initially planned in the fourth quarter of 2011,” he said.

Specifically, “In Europe, the market remains hesitant and focuses on 3G renovation where we are not playing to the extent we do in other parts of the globe.��

MKM’s Michael Genovese, who has a neutral rating on the stock, this morning writes that the beat on the bottom line might actually be a miss by most people’s standards, given that ” it includes a �0.05 tax benefit and a �0.01 one-time license fee.”

Genovese cut his revenue estimate to �4.34 billion for this quarter from a prior �4.41 billion. His EPS estimate, however, goes up a penny to �0.12.

Sanford Bernstein’s Pierre Ferragu, who maintains an Underperform on the stock, writes that “Cash burn was severe this quarter, �244m, despite �180m of one offs mentioned above, driven by working capital changes, interest charges, restructuring and pension cash contribution.”

Genovese echoes some of those claims made on Monday, namely that the company is struggling to find alternative sources of revenue:! “ Alcatel-Lucent struggles to find avenues for growth. In particular, the company is losing ground in Europe as it doesn��t participate to network modernisation programs and operators switch spending from fixed to mobile in that context.”

Moreover, “The company struggles to deliver sustainable and visible cost cutting and improve structurally gross margins.”