Alcatel forecasts winning market share without reducing prices

The network-equipment manufacturer Alcatel-Lucent SA, which posted a profit last quarter for the first time in two years, forecast that it can win market share from its competitors without reducing prices.

Alcatel-Lucent SA made an announcement, saying it has made a research and development collaboration with Intel Corp. The company also revealed that it is looking for more partners. Michel Combes, who is the Chief Executive Officer of the company, has lowered costs, sold assets and raised capital and aimed at increasing research in order to produce new products faster and sign more contracts than Alcatels rivals.

Combes said in an interview at the Mobile World Congress yesterday, which was cited by Bloomberg: “Its not only about prices, its about giving clients the products they want. In this industry, having a head start is a bonus.” He also added: “For months you heard me talk only about finance, because we couldnt sell our clients anything if they had doubts about our survival – thats out of the way now. Were entirely focused on innovation.”

Mr. Combes has made a promise to reduce the companys costs by 1 billion euros by 2015 and sell assets estimated to another one billion euros.

The Chief Executive Officer of the company is expected not only to deliver results on those promises, but also do everything in his power in order to increase the companys sales amid fierce competition on the market.

As reported by Bloomberg, Alcatel-Lucent revealed today that the company will invest alongside chipmaker Intel on R&D in areas including data storage and security. Mr. Combes explained that the collaboration does not include Intel acquiring an Alcatel stake, but it involves “a few hundred million” euros of investment made from each ones of the partners.

Combes said: “Our industry has room for improvement on that front. We dont need to have the lowest prices – I want to regain market share without breaking the industry.”

The company has been facing the fierce rivalry of its most serious competitors, such as Ericsson AB, the networking unit of Nokia Oyj, as well as Huawei Technologies Co. And as Ericsson has been oriented towards high-end contracts in order to increase its profit margins, last quarter Nokia Solutions and Networks said it was ready to let go of some profitability in order to accelerate sales growth.

Alcatel-Lucent SA rose by 1.43% to 3.1920 euro in Paris by 12:33 GMT, raising its market value to 8.97 billion euros.