Alcatel Lucent SA (ADR) (NYSE:ALU) reported Q1 2013 earnings Friday and — there’s no sugarcoating this — the news was not good.
Nearly a year into a much-ballyhooed program to right its ship and save its business, the company’s still losing money and burning cash like mad. Four months after negotiating a financial lifeline from Goldman Sachs Group, Inc. (NYSE:GS) and Credit Suisse Group AG (ADR) (NYSE:CS) — bankers who, if you ask me, would be just as happy to see Alcatel Lucent SA (ADR) (NYSE:ALU) fail and forfeit its patent portfolio — the company’s just piling more debt atop an already top-heavy debt load.
But enough about the big picture. Let’s delve into the specifics. In Q1 2013, Alcatel Lucent SA (ADR) (NYSE:ALU):
Grew its revenues a bare 0.6% in comparison to Q1 2012, or …
Viewed more pessimistically, saw revenues slide 21.2% sequentially.
Experienced gross margin slippage (0.8% worse than in last year’s Q1).
Reported a $0.19-per-share net loss, versus the $0.15-per-share profit it earned last year.
Operating cash flow at the firm ran negative to the tune of $188 million, while cash flow from operating activities — which Alcatel defines differently from OCF — came to negative-$542 million. This is significant, because when you pair this operating cash burn with Alcatel’s spending on capital investments, it works out to a total of $694 million in negative free cash flow for the quarter.
To put that number in context, $694 million is more cash than Alcatel Lucent SA (ADR) (NYSE:ALU) burned in all of 2012 or 2011. It’s nearly as much cash as the company burned through in 2010 … and this time, the company burned all this cash in just one single quarter.
To put that number in even more context, $694 million is quite literally the most cash Alcatel has ever burned in any single quarter at any time in the past 10 years. (You actually have to go all the way back to the bad old days of the Bubble Burst — 2001 — to find a quarter in which Alcatel’s performance was more horrendous.) And of course, thanks to all this cash burn, and all this lack of cash generation, Alcatel now officially has more debt on its books than it does cash.