But it's the Networks & Platforms business group that will likely get the most attention from Combes, as it forms the rump of the company. In the first quarter it generated revenues of €2.7 billion ($3.52 billion), 84 percent of the company's total revenues of €3.23 billion ($4.2 billion).
On the evidence of the first quarter, the optical equipment division within that group might have something to worry about: Its revenues fell by 15.6 percent compared with a year ago to €342 million ($446 million), while the rest of the Networks & Platforms divisions (including IP, wireless and fixed networks) all reported sales growth compared with a year ago.
To put the optical division's performance into even clearer perspective, one of its main rivals just reported a better than expected first quarter and a bullish outlook for the full year. (See Infinera Prepares for a Big 2013.)
So what's the deal with the optical equipment business? Alcatel-Lucent says it's being dragged down by its legacy product lines. Here's the official explanation:
Revenues for the Optics division were Euro 342 million, a decrease of 15.6% from the year-ago quarter. We continued to witness declines in our legacy equipment, which now represents 30% of our optics product revenues, partially offset by growth in WDM in both our Europe and APAC regions. Our 1830 Photonic Service Switch continues to grow as a percentage of optical revenues, reaching 36% in the first quarter, as sales grew at a high double-digit rate compared to the year-ago quarter. The relative share of 100G shipments has also continued to increase, from 12% in 2012 to 19% in the first quarter of 2013. Traction with our 400G Photonic Service Engine has also been confirmed, with the recent completion of successful 400G trials with Shaw Communications in Canada, France Telecom/Orange and Telefónica España.
ALU's optical division is a money loser which will continue to drag down ALU. It is most definitely a division that will continue to struggle given that it cannot continue to compete on price, nor because its legacy equipment is now outgunned by INFN.
I am not knowledgeable enough to know how much of the $446M in quarterly revenue is derived from Long Haul. But assuming it is one third, and INFN were to be able to grab 33% of that, it would represent ~$50M per quarter.
I think over the next 18 months, INFN will slowly but surely steal business fomr them, and maybe even from Huawei, as it also will find it harder to compete.
I think the demise of ALU's optical division is a catalyst for INFN.
Seems like both Alcatel and Ciena are struggling on the books, to some degree. Alcatel has Bell Labs tech and Ciena Nortel tech, so one can't count either of them out from an optical innovation standpoint. Hopefully they just cannot overcome their total cost handicaps and Infinera can win bids and make some money for their efforts. NSN is lean/mean but their tech is inferior.