Alcatel-Lucent Enterprise CFO Remi Thomas shares the company’s plans for the coming year and where ALU’s growth will come from over the next year.
Transcript for Remi Thomas & Alcatel-Lucent Enterprise
Blair Pleasant: Hi, this is Blair Pleasant. I am here with Alcatel-Lucent Enterprise’s CFO Remi Thomas. And Remi, we are going to talk about some of the things that happened last year and some of the things that you see happening in the future. So Alcatel-Lucent Enterprise had a rough year because of the European economy; can you talk a little bit about that, and what your plans are for the coming year?
Remi Thomas: Great, yeah. So we started off 2011 actually quite well, our business was growing, and we were positioning ourselves to invest both from a selling and marketing standpoint and an R&D standpoint. At the time, we also had Genesys with us, and then two things happened. Genesys got spun off from Alcatel-Lucent on the one hand, and then the European economy started to go into recession mode as of the third quarter of 2011. Our performance for 2011 wasn’t too bad, we still managed to grow the business, approximately 2%, and to have a decent level of profitability. But as we enter into 2012, obviously the story is a bit different, and two-thirds of our business comes from EMEA, which is currently facing a very challenging time. So the way we are coping with that is obviously on the one hand, we continue to invest in our products, and so R&D is an area of priority for us because we have a lot of new products to roll out. In terms of expense, we’ve been extremely careful about what we do. So we have a tight discipline on anything that has to do with discretionary expenses. We are cutting off a bit on marketing events for the time being. In tougher times you do have to adapt. But we are fundamentally investing in our future, and putting everything in place so that when the European economy is better, we will benefit from that.
Blair: Are there specific things that you are investing in that you can talk about?
Remi: Sure, definitely so. From an R&D standpoint, huge focus on unified communication, OpenTouch which is our next-generation SIP-based server. And we continue to expand our data portfolio. In terms of selling and marketing, we see areas that are growing today. Specifically when I look at APAC, when I look North America, when I look at the middle east and Africa, there is areas that are growing. So we continue to put a strong focus in investing in sales in those areas, so we are capable of benefiting from this pocket of growth. We are just being very careful about how we manage our costs.
Blair: I think everybody is, though. It’s not just Alcatel-Lucent Enterprise that is going through that, but pretty much everybody is.
Remi: Correct.
Blair: So as far as the coming year, are there certain segments of the market that you see really taking off or some being slower than others?
Remi: Our customers are talking a lot to us about Data Center on the data side, and with the OmniSwitch 10K, the 6900 Top of the Rack; the fact that we have also refreshed some of our products like the 6850E, we are in a really good position to talk to these customers about how they can address this. We try to leverage our strong position in the carrier space with IP and optical gear, which is carrier grade but fits the specific needs of some of the large customers in the Enterprise space. So having the umbrella of Alcatel-Lucent which has extremely strong carrier products to sell into the Enterprise space is helping us a lot. In voice, where I see the most interest right now, is in Unified Communication, in mobility and in anything that has to do with OPEX-based model as opposed to the CAPEX-based model. In tough times, CIO’s oversee have cash constraints, and so if we can offer them solutions that enable them to spread the investment over several years, they are really interested, and that is a key focus for us today.
Blair: Okay, well thank you very much.
Remi: You are certainly welcome.