Alcatel-Lucent insists revenues will now grow in 2007

The firm, formed last year by a merger between French group Alcatel and US rival Lucent, said its 2006 revenues would probably be less than 2005.

Also blaming tough trading conditions, Alcatel said 2006 revenues probably would be 18.3bn euros ($23.7bn; �12bn).

This compares with Alcatel and Lucent's joint revenues of 18.6bn euros in 2005.

'Significant impact'

Chief executive Patricia Russo said that in the past few months the merger had created short-term uncertainty for customers and staff as it looked "to develop the combined company's product portfolio and new organisation structure".

For the fourth quarter from October to the end of December, Paris-based Alcatel-Lucent said it expected revenues to total 4.4bn euros, down from 5.25bn euros a year earlier.

"This uncertainty, together with the work required to close the merger significantly impacted the business," she said.