Alcatel-Lucent's Q2 net loss rose to €885m from €254m last year - higher than expected because of the huge impairment charge from reorganisation.
A small operating profit €24m is better than last year's loss of €86m, with revenue up +1.9% to €3.61bn, which is better than expected. Sales were boosted by a large increase in revenue from North America. Shares rose in response.
The €552m impairment charge relates to the reorganisation of the company's wireless business and a €194m restructuring charge. It has cut €120m in costs, so that the cash burn drops to €248m from €517m. The gross margin was 31.9%, similar to last year and improving compared to Q1 13 as a result of higher volumes and a more favorable product mix.
New Chief Executive Officer Michel Combes will continue to look for savings, which means job cuts and asset sales in the coming months to further his reorganisation efforts at the company, which has lost more than $10bn since it was created through a 2006 merger.
Western Europe showed encouraging trends in the quarter, resulting in nearly flat performance, while Eastern Europe declined at a double digit rate.
He said Qualcomm will invest well below 5% as part of a joint research programme to develop so-called small-cell base stations for locations such as university campuses and malls.
"Good progress has been made in the implementation of the turnaround plan," Combes told analysts. "A new organisation is in place, we've accelerated on cost savings, and the announcement with Qualcomm shows we're moving ahead with technology partners like we said we would."
The company is seeking three to five partners to buy a combined stake of a little more than 5%, Combes said.