Alcatel, Siemens warn of slower 2001

Sales of mobile phone handsets are slowing

Alcatel and Siemens, the European telecoms equipment and mobile phone makers, have followed their rival Nokia in predicting slower sales growth in 2001.

Alcatel adjusted its sales growth estimate for this year down to 20-25%, from a previous 25%.

It said the main reason was slower spending in the United States as well as flat revenues in e-business worldwide.

"There's zero growth in the US and secondly, the financial sector is hesitating to finance phone operators, meaning they have a tendency to spend less," chief financial officer Jean-Pierre Halbron said.

As well as a slowdown in telecoms spending, Siemens said it would be affected by weaker sales and lower prices for computer chips made by its subsidiary Infineon.

Less exposed

The forecasts came as both companies reported substantial profit rises in the quarter ended 31 December: Alcatel's net income rose 26% to 426m euros ($396m; £271m) and Siemens was up 32% at 778m euros.

Investors responded positively to the results, with expectations of slower 2001 growth already having been factored in to telecoms share prices. At 1054 GMT, Alcatel shares were up 6.09% to 62.70 euros.

Alcatel is seen as less exposed to the US market than some of its rivals and mobile handsets - where sales are slowly substantially - account for only about 5% of its overall sales.

At 1042 GMT, Siemens stood 2.88% higher at 155.35 euros.

Alcatel: No drop off in Europe

Alcatel said it had completed its transformation to a purely telecoms company during the quarter and hit its target of selling 20 million wireless handsets in 2000.

However, in a statement, it noted "increasing signs at the end of the year of a slowdown in the European GSM (global standard for mobiles) market."

Alcatel: 2000 vs 1999

Net sales 31.4bn euros vs 23bn euros

Operating income 2.25bn euros vs 1.28bn euros

Net income 1.32bn euros vs 644m euros

Chief executive Serge Tchuruk said the business would continue expanding although a stronger euro might have a negative effect.

"Thanks to our leading broadband access positions and our growing momentum in optics, we expect to continue making advances in what will probably be a slower growing US market, at least during the first half."

Mr Tchuruk predicted there would be no drop off in sales growth in Europe - Alcatel's largest market - while Asia-Pacific would be the company's fastest growing sales area.

"Our broad product portfolio, well-balanced geographic diversity and focus on financially sound customers combine to create a solid platform upon which we can expand in a climate of market uncertainty," he said.

Siemens: Power generation opportunity

Siemens said sales growth would "edge off" during 2001 because of the stronger euro and the weaker outlook for some industries in which it was involved.

Siemens: Quarter ended 31 December

Net income up 32% to 778m euros

New orders up 28% to 23.6bn euros

Sales up 23% to 20.5bn euros

However, it said it still expected orders and sales to show double-digit growth and outpace the industry average.

"Despite the challenges being faced by individual groups, we are again aiming for a considerable increase in earnings," chief executive Heinrich von Pierer said.

"The key figures for the (company's fiscal) first quarter show that we are on the right track."

One bright spot for the company might be power generation. A shortage of generating capacity in the US has increased demand for gas turbines - a sector in which the German company is among world leaders.

Infineon, the company's computer chip-making spin-off, reported net income of 280m euros for the quarter ended 31 December, double the amount in the corresponding period of 1999 but about half that achieved in the previous quarter.

Quarter-on-quarter sales slumped 30% to 1.66bn euros because of weaker demand.

Siemens owns 71% of Infineon but last month said it would reduce its stake through a share swap plan.

Siemens is planning a US stock market listing in March.