Alcatel chief says '3G and DSL will protect us'

Peter Radley, chairman of Alcatel UK, told silicon.com that the company is sitting pretty, with its DSL and 3G businesses continuing to grow.

"The net picture is positive. The whole of the US is in turmoil but in the companies outside we see fairly consistent business. We've picked up a number of big DSL contracts in Asia and Europe and the waiting list for DSL is still huge."

Radley predicted a small flattening in the market but claimed revenue from Europe and Asia Pacific markets would compensate for any losses. Recently announced redundancies would only affect the US, he said.

Taking a swipe at his rivals' recent problems, Radley said: "Nortel and Lucent have been more impacted by the turmoil in the US. At a time when a lot of new network companies set up for 3G, many were very free with their vendor financing - we weren't."

The company's cautious attitude to investments in 3G can largely be thanked for its current fortunes. "There are a lot of contracts out there but it's your judgement if they are lucrative. We are beginning to scrutinise the business plans of our customers. This is a different viewpoint from normal as they are the customer, yet we scrutinise them. But we have to if we are to share the risk."

However, he admitted that Alcatel's handset division has been hit. "Handsets only make up seven per cent of our revenue so it's not a driving force. Nevertheless, it is an issue and we've stopped production for two to three weeks because the service providers have a lot of surplus stock."

Mark Simmons, senior analyst at Bloor Research, agreed that Alcatel's healthy DSL order book does make a difference, protecting the firm from any potential losses in other parts of the business. He added that the company's handset business also has plenty of room for growth.