RealTime IT News

Lucent Revenues To Fall Short

Beleaguered networking concern Lucent Technologies has cut its quarterly revenue expectations, and said the path to profitability will be a longer one than first thought.

Lucent has previously said it expected to return to profitability in fiscal 2002. But "large service providers continue to reduce or defer their spending as they rethink their business plans and conserve cash, which is having an impact on our top line," said Lucent Chief Financial Officer Frank D'Amelio, in a statement.

Because of the softness in the market, Lucent's "return to profitability and positive cash flow (will) slip into fiscal year 2003," he also said.

"We are moving as swiftly as possible to return to profitability and positive cash flow," said Lucent President and Chief Executive Officer Patricia Russo. "We will continue to monitor the market and, if necessary, take the appropriate actions to continue to align Lucent with current market conditions."

The consensus of analysts surveyed by Thomson Financial/First Call had Lucent reporting a loss of $0.14 per share, and a loss range of between $0.06 and $0.24.

Lucent has closed plants and offices, slashed tens of thousands of jobs and spun off business units during the telecom sector's hard times, in an effort to get back into the black.

The company also said it now expects revenues to show an up to 10% improvement on a sequential basis for the second fiscal quarter, down from previously announced guidance of sequential improvement in the top line of 10% to 15%. Lucent released the 10% to 15% figures about three weeks ago.

Lucent said it will update its guidance when it releases its financials for the second quarter on April 22.

Murray Hill, N.J.-based Lucent also blamed current market conditions for a delay in the spinoff of Agere Systems Inc. While the company says it is "committed to completing the spinoff," it will not be able to use the results from the second fiscal quarter to meet the performance conditions, as defined under the company's credit facility, necessary to complete the spinoff of Agere.

The earliest Lucent sees the spinoff happening is the third fiscal quarter. Lucent intends to apply for a supplemental ruling from the Internal Revenue Service that the spinoff of Agere will be tax-free to Lucent and its shareholders despite the delay in the spinoff. The company added it "is confident that it will obtain such a ruling."

Lucent has "sufficient liquidity to fund its operations and business plans and has no outstanding balance on its credit facility," officials said. However, the company is continuing to "consider opportunities to raise additional capital in order to further strengthen its balance sheet and provide for more excess liquidity. Lucent may pursue a financing transaction, most likely a convertible offering, "as soon as market conditions permit"

Also, Lucent continues to believe it can achieve gross margins in the 20% range for the second fiscal quarter. It also remains optimistic that it will reach its target of 35% in gross margins during fiscal 2003 through improved sales volumes and product mix, reduction of one-time items, continued implementation of cost reductions, market and product rationalization work and new product rollouts.