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Alcatel profit rises 26%
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January 31, 2001: 7:04 a.m. ET
French telecom maker warns handset sales will slow, stock jumps
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LONDON (CNNfn) - French telecom equipment maker Alcatel posted a 26-percent rise in fourth-quarter profit on Wednesday, causing a buying frenzy in its stock.
The cell phone and network equipment maker said profit rose to  426 million ($395 million) from 338 million in the final quarter 1999. The increase was in line with the average of analysts' expectations.
Alcatel, like many of its counterparts, downgraded its 2001 sales growth targets on Wednesday amid reduced forecasts for mobile phone sales. It said 2001 sales should rise by between 20 percent and 25 percent, compared to its earlier target of 25 percent.
Shares of Alcatel (PCGE) jumped 6.1 percent to 62.70 in midday trading in Paris on Wednesday. 
"This is a very solid set of numbers," Susan Anthony, a telecom sector analyst with Crédit Lyonnais Securities in London, told CNNfn.com. "This was better than I had expected on all levels," she said, adding she had been anticipating net income to come in at 291 million in fourth-quarter 2000.
Fourth-quarter operating profit rose 32 percent to 881 million, while revenue rose 26 percent to 9.7 billion.
"What most people were wondering was what Alcatel would say on future sales ... and they indeed trimmed their target," said Anthony, who added that she was maintaining her "buy" rating on Alcatel shares.
Nokia, the world's biggest mobile phone maker, said on Tuesday that it expects the pace of growth in handset sales to slow in early 2001, while its leading Nordic rival, Sweden's Ericsson, announced last Friday it's quitting the business of making cell phones.
As for the network gear side of Alcatel's business, U.S. counterparts
Nortel (NT: Research, Estimates), Cisco Systems (CSCO: Research, Estimates) and fibre-optic cable manufacturer Corning (GLW: Research, Estimates) have all scaled back their forecasts in recent weeks.
Alcatel said income from operations for the full year 2000 totalled 2.25 billion, up 77 percent from 1.3 billion in 1999. 
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