updated 2/8/2008 1:27:27 PM ET 2008-02-08T18:27:27

Alcatel-Lucent, the Franco-American telecommunications equipment maker, posted a loss Friday of about $3.8 billion for the fourth quarter, said it would scrap its 2007 dividend and predicted a rocky 2008.

Alcatel-Lucent reported a net loss of 2.58 billion euros in the quarter ending Dec. 31, as it booked 2.52 billion euros ($3.71 billion) in write-downs related to the reduced value of assets inherited from Lucent Technologies Inc.

Still, the company said sales rose and it swung to an operating profit in the last three months of 2007.

Revenue for the fourth quarter rose to 5.23 billion euros ($7.61 billion), up 18 percent from 4.42 billion euros in the same period in 2006. That was above the 4.92 billion euros forecast by analysts.

Operating profit amounted to 303 million euros ($441 million), versus a loss of 3 million euros a year earlier. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company’s basic business activity.

The fourth quarter normally sees strong revenues for telecommunications equipment makers. But the latest figures were up from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, N.J.

Despite the rise in fourth-quarter sales, Alcatel-Lucent painted a somber picture for 2008. Its American CEO Patricia Russo linked the forecast to the larger global economic picture.

“While the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months,” Russo said in a statement.

Rivals Telefon AB LM Ericsson and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG, have already given downbeat forecasts for the market in 2008.

Alcatel-Lucent said it would suspend its 2007 dividend because of the uncertain outlook for 2008. The company predicted a first-quarter loss in 2008 because of a seasonal drop in revenue of 20 percent to 25 percent.

Alcatel-Lucent said it forecasts the global communications equipment and related services market in 2008 to be “flat to slightly up” at a constant euro-dollar exchange rate and “slightly down” at the current rate.

Russo seemed to be lowering investors’ expectations for the second year of the combined operation after the company’s bullish expectations for 2007. After a string of profit warnings last year, Russo faced down bouts of speculation that she or chairman Serge Tchuruk were under pressure to quit.

Russo predicted the company would recover market share in the GSM and WCDMA mobile-phone technologies in 2008. “We’re going to do everything we can to gain share in 2008.” WCDMA, or Wideband Code-Division Multiple Access, is a third-generation wireless technology.

Alcatel-Lucent’s share price has plunged about 60 percent over the previous 12 months on the back of a string of profit warnings and concern over the growth prospects for the telecommunications equipment market in 2008.

Alcatel-Lucent were down 1.4 percent to 4.07 euros ($5.93) in afternoon trading in Paris after bobbing up and down earlier. Its U.S. shares fell 20 cents, or 3.3 percent, to $6.05 in morning trading in New York.

Alcatel-Lucent reported a net loss of 3.52 billion euros ($5.12 billion) for all of 2007. The loss stemmed primarily from the goodwill writedown.

Excluding the non-cash write-downs, Alcatel-Lucent posted an adjusted fourth-quarter loss of 48 million euros ($69.9 million) compared with a loss of 618 million for the same quarter a year earlier. The adjusted loss for 2007 was 433 million euros ($630 million) compared to a profit of 522 million euros ($760 million) in 2006.

The 2006 fourth-quarter and yearly results were unusual, however, because they were calculated based on 11 months of Alcatel earnings and one month of the combined Alcatel-Lucent.

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