Telecom equipment maker Alcatel-Lucent posted a net loss of 1.3 billion euros ($1.76 billion) last year hit by a writedown on its mobile business and restructuring costs, showing the uphill climb it faces in its long-awaited turnaround.
The company also announced on Thursday that it was in talks to sell 75 percent of its enterprise business, which sells communications products and services to corporations, to investment fund China Huaxin. The stock soared over 9 percent on the news in morning trade.
The potential transaction prices Alcatel-Lucent Enterprise at 268 million euros on an enterprise value basis.
Alcatel-Lucent assembly lineChris Ratcliffe | Bloomberg | Getty Images
Alcatel Chief Executive Michel Combes, who took over in April 2013, has pledged 1 billion euros in asset sales through 2015. He has lifted investor hopes and led the stock to quadruple last year.
Speaking to CNBC he said that this transaction with the Chinese firm was expected and added the company would retain 15 percent of the enterprise unit which could then be sold at a later date using a "liquidity mechanism."
Revenue in the fourth quarter was flat at 3.93 billion euros, but the gross margin improved amid aggressive cost cutting to reach 34 percent, leading to net income of 134 million euros.
Analysts had on average forecast fourth-quarter sales of 4.16 billion euros, a gross margin of 32 percent, and an adjusted net loss of 31.5 million, according to Thomson One data.
"We are successfully implementing the focus of the company on growth territories," Combes told CNBC Thursday. "We have improved our balance sheet, liquidity is no more an issue for Alcatel-Lucent."
IP (Internet protocol) networking, cloud technology and ultra broadband are key areas Combes sees the sector as a whole turning to for growth, and Alcatel was no different.
With the help of its restructuring plan, known as the "shift plan", Alcatel is hoping to become a specialist in these areas. It previously announced a cost-cutting drive to save a total of 1 billion euros ($1.35 billion).
Combes believes that his current role still presents a "tremendous challenge" but told CNBC that he was enjoying it, with the company edging closer to what looks like a long-awaited turnaround.
"The industry is a very exciting industry. There's a huge potential for growth…I am quite optimistic for the sector," he said.