PARIS, February 8 /PRNewswire/ --     For the Fourth Quarter 2007

- Revenues of Euro 5.23 billion, up 20% sequentially and 18%
year-over-year

- Adjusted(2) operating income(1) of Euro 303 million or 5.8 % of
revenues

- Adjusted net loss (group share) of Euro (48) million or Euro
(0.02) per diluted share, including an impairment charge of Euro (81) million

- Reported net loss (group share) of Euro (2.58) billion or
Euro (1.14) per diluted share, including an impairment charge of Euro (2.52)
billion

For the Full Year 2007

- Revenues of Euro 17.79 billion, down 2.5% at current rate,
up 2.1% at constant rate

- Adjusted(2) operating income(1) of Euro 110 million or 0.6 % of
revenues

- Adjusted(2) net loss (group share) of Euro (443) million or
Euro (0.20) per diluted share, including an impairment charge of Euro (377)
million and a restructuring charge of Euro (842) million

- Reported net loss (group share) of Euro (3.52) billion or
Euro (1.56) per diluted share, including an impairment charge of Euro (2.94)
billion and a restructuring charge of Euro (856) million

- Funded status of pensions and OPEB of Euro 2.81 billion at
year-end 2007, up from Euro 2.44 billion at September 30, 2007.

Note: 2007 reported and adjusted profit and loss statement is enclosed in
Annex, click here: http://www1.alcatel-lucent.com/4q2007/pdf/annex_E.pdf

Alcatel-Lucent's Board of Directors (Euronext Paris and NYSE: ALU) 
reviewed and approved reported results for the fourth quarter and the
full year 2007.

During the quarter, revenues grew 20.3 % sequentially and 18.4
% year-over-year to Euro 5,234 billion. At constant Euro/USD exchange rate,
revenues grew 24.3 % sequentially and 25.4% year-over-year. The Carrier
business segment recorded a strong double-digit growth, up 16.2%
year-over-year at current exchange rate, driven by wireline and wireless. The
Services business segment also registered a strong 27.0% growth. Finally, the
Enterprise business segment was up 3.8%. The adjusted(2) gross margin was 
32.4% of sales, impacted by a one-time charge of Euro 98 million, resulting 
from a change in the cost recognition methodology for a large wireless 
construction contract. Adjusted(2) operating income(1) was Euro 303 million 
or 5.8% of sales. The company reduced approximately 1,600 positions in the 
quarter.

For the full year 2007, Alcatel-Lucent generated revenues of
Euro 17.79 billion, down 2.5% year-over-year at current exchange rate and up
2.1% at constant Euro/USD exchange rate. The adjusted(2) operating income(1) 
was Euro 110 million or 0.6 % of revenues. The company reduced 6,700 
positions over the full year, before the impact of managed services and 
acquisitions (approximately 1,400 people). As expected, the company did 
retain most of its operating expense savings (SG&A and R&D) in 2007 
(approximately Euro 280 million). Due to the continuing decrease in the 
market value of Alcatel-Lucent's shares during the second half of 2007 
and its revised outlook, the company has carried out an additional 
impairment test of goodwill in the fourth quarter of 2007. This test led to 
an impairment charge of EUR (2.52) billion in the quarter, mainly impacting 
the goodwill allocated to CDMA and IMS activities.

Executive Commentary

Patricia Russo, CEO commented:

"This quarter, we delivered solid year-over-year revenue
growth of 18.4% with the strongest performance in the carrier and services
businesses. These results reflect the strengthening of our position in IP and
optics, a recovery of our GSM business and the ramp up of WCDMA.

Our adjusted(2) gross margin - excluding the one-time impact of the 
charge in the cost recognition methodology for this large wireless 
construction contract - was roughly flat quarter-over-quarter, despite a 
challenging pricing environment and an unfavorable shift in our geographic 
and product mix. Our adjusted(2) operating margin has significantly improved 
sequentially, reflecting higher volumes and, to a lesser extent, a reduction 
in our operating expenses.

As we have said, 2007 was a transition year for the company as
we executed our integration plans in a difficult market environment.
Notwithstanding these challenges, the performance of our wireline, enterprise
and services business has been solid. On the other hand, the
slower-than-expected ramp up of revenues in WCDMA and NGN/IMS, two areas in
which we have been investing, has severely impacted profitability."

Outlook

While Alcatel-Lucent does not traditionally provide quarterly
guidance, it is important to be reminded of the seasonal patterns that impact
the first quarter and which historically have resulted - in the case of the
former Alcatel - in a sequential drop in revenues of 20% to 25%. The company
expects to incur a loss at the adjusted(2) operating income(1) level in the 
first quarter of 2008 as a result of this seasonality.

Patricia Russo further added:

"While the long term prospects of our industry remain good,
the macroeconomic environment has created uncertainty in our markets in the
last few months. Our initial projections for 2008 indicate that the global
Telecommunications equipment and related services market should be flat to
slightly up at constant EUR/USD rate and slightly down at current rate.

With this in mind, we will continue to execute against our
three-year plan. The ongoing implementation of a more selective pricing
approach as well as product cost reduction program should enable us to
improve our gross margin. We also intend to make continued good progress in
our fixed costs reduction plan."

Given the expected improvement in the gross margin as well as
a reduction in adjusted(2) operating expenses, Alcatel-Lucent expects an
adjusted(2) operating margin in the low to mid single digit range in 
percentage of revenues in full year 2008.

Reported Results

In accordance with regulatory reporting requirements, the
fourth quarter 2007 and the full year 2007 reported results include the
non-cash impacts from purchase price allocation entries (PPA) following the
merger with Lucent Technologies.

For the fourth quarter 2007, Alcatel-Lucent's reported
revenues amounted to Euro 5,234 million. The reported gross profit was Euro
1,698 million, including the impact from PPA entries of Euro 4 million.
Reported operating income(1) (loss) was Euro 155 million, including the
negative impact from PPA entries of EUR (148) million. For the quarter,
reported net loss (group share) was Euro (2,579) million or Euro (1.14) per
diluted share (USD (1.67) per ADS), including the negative impact from PPA
entries of Euro (2,531) million.

For the full year 2007, Alcatel-Lucent's reported revenues
amounted to Euro 17,792 million. The reported gross profit was Euro 5,709
million, including the impact from PPA entries of Euro (253) million.
Reported operating income(1) (loss) was Euro (707) million, including the
impact from PPA entries of Euro (817) million. Reported net loss (group
share) was Euro (3,518) million or Euro (1.56) per diluted share (USD (2.28)
per ADS), including the impact from PPA entries of Euro (3,075) million.

Adjusted(2) Results

In addition to the reported results, Alcatel-Lucent is
providing (non audited) adjusted(2) results in order to provide meaningful
comparable information, which exclude the main non-cash impacts of the
purchase price allocation (PPA) entries in relation with Lucent business
combination. These non-cash impacts are very material and non-recurring due
to the different amortization periods depending of the nature of the
adjustments, as detailed in the annex. Reported figures are not comparable
with our main competitors and many other business players who have not
undergone any similar business combinations as the Lucent's one. Prior period
results refer to adjusted(2) pro-forma(3) combined operations for 
Alcatel-Lucent as of January 1, 2006.

For the fourth quarter, Alcatel-Lucent generated revenues of
Euro 5,234 million, compared to a pro-forma(3) Euro 4,421 million in the
year-ago quarter, an increase of 18.4 %. The adjusted(2) gross profit was 
Euro 1,694 million, 32.4 % of revenues, compared to an adjusted(2) pro-forma
(3) gross profit of EUR 1,447 million in the year-ago quarter. Adjusted(2) 
operating income(1) (loss) was Euro 303 million, 5.8% of revenues, compared 
with an adjusted(2) pro-forma(3) operating income(1) (loss) of Euro (3) 
million in the year-ago quarter. For the quarter, adjusted(2) net loss 
(group share) was Euro (48) million or Euro (0.02) per diluted share (USD 
(0.03) per ADS). The adjusted(2) pro-forma(3) net loss (group share) was Euro 
(618) million, or Euro (0.27) per diluted share (USD (0.36) per ADS), in 
the fourth quarter 2006.

For the full year, Alcatel-Lucent's revenues were Euro 17,792
million, compared to a pro-forma(3) Euro 18,254 million in 2006, a 2.5 %
decrease at current exchange rate, or a 2.1% increase at constant Euro/USD
exchange rate. The adjusted(2) gross profit was Euro 5,962 million, 33.5 % of
revenues, compared to an adjusted(2) pro-forma(3) gross profit of EUR 6,842
million in the year-ago quarter. Adjusted(2) operating income(1) (loss) was 
Euro 110 million, 0.6% of sales, compared to an adjusted(2) pro-forma(3) 
operating income(1) (loss) of Euro 925 million in 2006. Adjusted(2) net 
loss (group share) was Euro (443) million or Euro (0.20) per diluted share 
(USD (0.29) per ADS). The adjusted(2) pro-forma(3) net income (group share) 
was EUR 522 million, or EUR 0.23 per diluted share (USD 0.30 per ADS) in 2006.

Balance Sheet, Pension Status and Dividend Policy

The net (debt)/cash position was Euro 271 million as of December 31,
2007, compared with Euro (124) million as of September 30, 2007. The funded
status of pensions and other post retirement benefits (OPEB) amounted to Euro
2,806 million at year-end 2007, up from Euro 2,436 million as of September
30, 2007. As part of the prudent management of its funds, the group reduced
its exposure to equity markets in November 2007. As of December 31, 2007, the
global asset allocation of the group's funds was as follows: 20% in equity
securities, 60% in bonds and 20% in alternatives (i.e. real estate, private
equity and hedge funds). This compares to respectively 36%, 48% and 16% as of
December 31, 2006.

In light of these results and of a more uncertain market outlook, the
board has determined that it is prudent to suspend dividend payment for 2007.

Adjusted(2) Profit &    Fourth quarter Fourth quarter Full year Full year
    Loss statement                 2007           2006        2007       2006
    Key figures only                        
    In Euro million 
    except for EPS                           Pro-forma(3)        Pro-forma(3)
    Revenues                      5,234          4,421      17,792    18,254
    Gross profit                  1,694          1,447       5,962     6,842
    In % of revenues               32.4%          32.7%       33.5%     37.5%
    Operating income(1)             303             -3         110       925
    In % of revenues                5.8%          -0.1%        0.6%      5.1%
    Net income (loss)
    (Group share)                   -48           -618        -443       522
    EPS diluted (in Euro)         -0.02          -0.27       -0.20      0.23
    E/ADS(i) diluted (in USD)     -0.03          -0.36       -0.29      0.30
    Number of diluted 
    shares (million)            2,258.7        2,250.7     2,255.9   2,266.5



(i) E/ADS has been calculated using the US Federal Reserve Bank
of New York noon Euro/dollar buying rate of USD 1.4603 as of December 31,
2007 and of USD 1.3197 as of December 31, 2006.

Segment breakdown    Fourth quarter Fourth quarter Full year Full year
    of revenues               2007           2006        2007       2006
    (In Euro million)                 Pro-forma(3)             Pro-forma(3)
    Carriers                 3,734          3,214       12,819     13,644
    - o/w Wireline           1,691          1,470        6,003      5,735
    - o/w Wireless           1,570          1,249        5,287      5,815
    - o/w Convergence          473            496        1,529      2,094
    Enterprise                 435            419        1,562      1,491
    Services                 1,020            803        3,173      2,935
    Other & eliminations        45            -15          238        184
    Total group revenues     5,234          4,421       17,792     18,254



Segment breakdown of    Fourth quarter Fourth quarter Full year Full year
    adjusted(2) operating
    income(1)                     2007           2006        2007       2006

    (In Euro million)                        Pro-forma(3)        Pro-forma(3)

    Carriers                        94            -73        -151        802
    In % of revenues               2.5%          -2.3%       -1.2%       5.9%
    Enterprise                      56             49         127        126
    In % of revenues              12.9%          11.9%        8.1%       8.5%
    Services                       107             35         147        120
    In % of revenues              10.5%           4.4%        4.6%       4.1%
    Other & eliminations            46            -14         -13       -122
    Total group adjusted
    (2) op. income(1)              303             -3         110        925



Business Commentary

The following business comments are based on a year-over-year comparison
at current Euro/USD exchange rate, unless otherwise stated.

Carrier Business Segment

For the fourth quarter 2007, revenues for the carrier business segment 
were Euro 3,734 million compared to a pro-forma(3) Euro 3,214 million in the
year-ago quarter, a 16.2% increase at current Euro/USD exchange rate. The
wire-line business registered a solid performance while improved performance
was seen in wireless and convergence. Adjusted(2) operating income(1) (loss)
was Euro 94 million, a 2.5% operating margin.

Since October 31, 2007 and the announcement of its reorganisation,
Alcatel-Lucent no longer manages its Carrier Business Segment according to
three business groups (Wire-line, Wireless and Convergence). The following
comments are therefore provided for the continuity of analysis for full year
2007 and may not be provided as such in future reports.

Wireline

For the fourth quarter 2007, revenue for the wireline business group were
Euro 1,691 million compared to a pro-forma(3) Euro 1,470 million a year-ago,
an increase of 15%.

Key Highlights:

- Optical networking registered very strong growth in
terrestrial and in submarine.

- Broadband access revenues were down year-over-year in the
fourth quarter, as the decline in DSL lines (-5% to 8.3 million) was not yet
fully compensated by the ramp-up in G-PON. For 2007, 33.3 million DSL lines
were delivered, up 8%.

- Data revenues enjoyed accelerated growth this quarter. This
was due to a more moderate decline in MSWAN whilst IP routing revenues were
still growing strongly.

Wireless

For the fourth quarter 2007, revenues for the wireless business segment
were Euro 1,570 million compared to a pro-forma(3) Euro 1,249 million in the
year-ago quarter, an increase of 26%, driven primarily by higher sales in GSM
and WCDMA.

Key Highlights:

- Revenue in GSM increased strongly as the new products
offering (Twin TRX and ATCA BSC) gained momentum in the market.

- WCDMA revenues more than doubled sequentially as
Alcatel-Lucent started to deploy contracts booked at the start of the year.

- CDMA revenues were up slightly year-over-year driven by the
US and India.

- Alcatel-Lucent started to book revenues in WiMax.

Convergence

For the fourth quarter 2007, revenues for the convergence
business group were Euro 473 million compared to a pro-forma(3) Euro 496
million in the year-ago quarter, a 5% decrease.

Key Highlights:

- Classic core switching revenue continued to decline compared
to the year-ago quarter but showed a strong sequential increase due to
seasonality.

- Next generation core networking also showed a strong
sequential increase driven largely by higher sales of the NGN mobile offer
and increased business in China.

- Revenues were down in the multimedia and payment businesses
while IMS revenues increased, albeit on a small base.

Enterprise Business Segment

For the fourth quarter 2007, revenues for the enterprise
business segment were Euro 435 million compared to a pro-forma(3) Euro 419
million in the year-ago quarter, an increase of 3.8%. Adjusted(2) operating
income(1) (loss) was Euro 56 million, an operating margin of 12.9%.

Key Highlights:

- Quarterly revenues increased across all parts of the
enterprise business, with particularly strong momentum in Europe and Asia,
where Alcatel-Lucent won a number of IP transformation projects.

- Genesys, the contact centre activity, continued to grow at
twice the market rate in the fourth quarter and expanded its know-how in
analytics and performance management software through the December
acquisition of Informiam.

- Over the year, Alcatel-Lucent repositioned its enterprise
business in fast growing markets, in particular security, services, verticals
and emerging markets.

Services Business Segment

For the fourth quarter 2007, revenue for the services business segment
were Euro 1,020 million compared to a pro-forma(3) Euro 803 million in the
year-ago quarter, an increase of 27.0%. Adjusted(2) operating income(1) 
(loss) was Euro 107 million, a 10.5% operating margin.

Key Highlights:

- Revenues in Network operations enjoyed the strongest growth,
as a result of some of the very large contracts won this year.

- Network integration revenues were also up very strongly,
driven by IPTV and IP/network transformation projects as well as Applications
integration.

- The focus on the Industry & Public sector market is starting
to pay-off, with several wins for end-to-end communications and security
solutions.

- Maintenance declined slightly due to some price pressure but
Alcatel-Lucent made significant inroads into the fast growing multi-vendor
maintenance space.

Alcatel-Lucent will host an audio webcast at 1:00 p.m. CET,
which can be accessed at http://www.alcatel-lucent.com/4q2007.

Upcoming Events/ Announcements

Complete audited consolidated financial statements will be
filed in the Document de Référence and in the Form 20F end of March 2008. In
the meantime condensed consolidated financial statements are available on our
Internet site.

February 12 Media and Investors conference at Mobile World
Congress (Barcelona)

May 30 Annual shareholders' Meeting in Paris

Notes

All adjusted figures are unaudited

(1)- Operating income (loss) is the Income (loss) from
operating activities before restructuring costs, impairment of assets, gain
(loss) on disposal of consolidated entities and post-retirement benefit plan
amendment.

(2)- "Adjusted" refers to the fact that it excludes main
impacts from Lucent's purchase price allocation. (see annex for detailed
information)

(3)- "Pro-forma" refers to the 2006 figures taking into
account Lucent's activity from January 1, 2006 as if Lucent was acquired at
this date. In reported figures Lucent is consolidated from December 1, 2006.

About Alcatel-Lucent

Alcatel-Lucent (Euronext Paris and NYSE: ALU) provides
solutions that enable service providers, enterprise and governments
worldwide, to deliver voice, data and video communication services to
end-users. As a leader in fixed, mobile and converged broadband networking,
IP technologies, applications and services, Alcatel-Lucent offers the
end-to-end solutions that enable compelling communications services for
people at home, at work and on the move. With operations in more than 130
countries, Alcatel-Lucent is a local partner wit global reach. The company
has the most experienced global services team in the industry, and one of the
largest research, technology and innovation organizations in the
telecommunications industry. Alcatel-Lucent achieved revenues of Euro 17.8
billion in 2007 and is incorporated in France, with executive offices located
in Paris. For more information, visit Alcatel-Lucent on the Internet:
http://www.alcatel-lucent.com

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS

Except for historical information, all other information in
this press release consists of forward-looking statements within the meaning
of the US Private Securities Litigation Reform Act of 1995, as amended. These
forward looking statements include statements regarding the future financial
and operating results of Alcatel-Lucent such as (i) expected operating income
for the first quarter 2008, (ii) expected improvement in gross margin, and
(iii) expected improvement in operating margin in 2008. Words such as
"expects," "anticipates," "targets," "projects," "intends," "plans,"
"believes," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements which are not statements
of historical facts. These forward-looking statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
that are difficult to assess. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements. These risks and uncertainties are based upon a
number of important factors including, among others: our ability to operate
effectively in a highly competitive industry with many participants; our
ability to keep pace with technological advances and correctly identify and
invest in the technologies that become commercially accepted; difficulties
and delays in achieving synergies and cost savings; fluctuations in the
telecommunications market; exposure to the pricing pressures in the regions
in which we sell; the pricing, cost and other risks inherent in long-term
sales agreements; exposure to the credit risk of customers; reliance on a
limited number of contract manufacturers to supply products we sell; the
social, political and economic risks of our global operations; the costs and
risks associated with pension and postretirement benefit obligations; the
complexity of products sold; changes to existing regulations or technical
standards; existing and future litigation; difficulties and costs in
protecting intellectual property rights and exposure to infringement claims
by others; compliance with environmental, health and safety laws; whether
Alcatel-Lucent can execute against and obtain benefits from its three-year
plan to improve gross margin and cut operating expenses, in order to achieve
an improved operating margin, and whether these efforts will achieve their
expected benefits; the economic situation in general (including exchange rate
fluctuations) and uncertainties in Alcatel-Lucent's customers' businesses in
particular; customer demand for Alcatel-Lucent's products and services;
control of costs and expenses; international growth; conditions and growth
rates in the telecommunications industry; and the impact of each of these
factors on sales and income. For a more complete list and description of such
risks and uncertainties, refer to Alcatel-Lucent's Form 20-F for the year
ended December 31, 2006, as well as other filings by Alcatel-Lucent with the
US Securities and Exchange Commission. Except as required under the US
federal securities laws and the rules and regulations of the US Securities
and Exchange Commission, Alcatel-Lucent disclaims any intention or obligation
to update any forward-looking statements after the distribution of this news
release, whether as a result of new information, future events, developments,
changes in assumptions or otherwise.

Alcatel-Lucent Press Contacts

    Régine Coqueran,
    Tel: +33(0)1-40-76-49-24,
    regine.coqueran@alcatel-lucent.com;

    Stéphane Lapeyrade,
    Tel: +33(0)1-40-76-12-74,
    stephane.lapeyrade@alcatel-lucent.com;

    Alcatel-Lucent Investor Relations
    Rémi Thomas,
    Tel: +33(0)1-40-76-50-61,
    remi.thomas@alcatel-lucent.com;

    Maria Alcon,
    Tel: +33(0)1-40-76-15-17
    maria.alcon@alcatel-lucent.com;

    John DeBono,
    Tel: +1-908-582-7793,
    debono@alcatel-lucent.com;

    Tony Lucido,
    Tel: +33(0)1-40-76-49-80, 
    alucido@alcatel-lucent.com;

    Don Sweeney, 
    Tel: +1-908-582-6153, 
    dsweeney@alcatel-lucent.com