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Lucent: Nearly US$9b In Losses

Troubled Internet networker Lucent Technologies reported a fourth quarter net loss totaling $9 billion. But the Murray Hill, N.J.-based company said its loss from continuing operations narrowed during the quarter, while its pro-forma net loss was worse than what Wall Street had expected.

Lucent's pro-forma loss from continuing operations hit $909 million or $0.27 per share in the quarter, better than the $1.2 billion or $0.35 per share it reported in this year's third quarter, officials said. The $0.27 per share figure is higher than the consensus of $0.23 per share Wall Street analysts had expected to see from the company, according to Thomson Financial/First Call.

Lucent's $8.8 billion net loss equates to a loss of $2.59 a share, with $8 billion of the loss coming from headcount reductions, product rationalizations, discontinued operations and the associated asset write-offs. In the previous year's fourth quarter, Lucent reported a net loss of $484 million or $0.14 per share.

Even with all of the red ink, Lucent said it remains on track to both return to profitability and achieve positive cash flow in fiscal year 2002.

Total revenues declined 28 percent to $5.2 billion in the fourth quarter, from $5.9 billion in this year's third quarter, officials also said.

"We delivered continued improvement in the bottom line and a solid top-line performance in the face of sharply reduced spending throughout the industry," said Lucent Chairman and Chief Executive Officer Henry Schacht, in a statement.

Lucent said the overall market decline will be 15 percent to 20 percent in 2002. "We think industry spending in our first fiscal quarter of 2002 will be even lower than these levels due to the increased uncertainty after Sept. 11 and the spending patterns of our large North American customers," Schacht also said.

But in the first quarter of 2002, Schacht said, "We expect to, once again, deliver sequential improvement on the bottom line thanks to our restructuring activities. As to the top line, we expect our revenues to decline sequentially."

Lucent's revenues should improve in the second quarter of 2002, he also said. "In fact, we are seeing early signs of increased customer spending in some segments of our business for that quarter," he said. "This isn't surprising because even our customers' reduced forecasts for calendar 2002 are still higher than their rate of spending in the current quarter.''

"When we put our plan together, we were conservative and took these difficult market conditions into consideration," he also said. "We still believe that we will be able to meet our goal of returning to profitability and positive cash flow in 2002.''

In terms of its restructuring, Lucent said it had reduced its workforce by an additional 10,000 in the quarter through layoffs and attrition, as well as cutting another 8,500 as a result of the company's voluntary offer. Lucent had said it would slash its workforce to between 57,000 to 62,000 from the 106,000 it had at the start of this year.

In the company's Phasee II of restructuring, it will reduce its workforce by an additional 15,000 to 20,000, officials added.

Lucent shares closed at $6.90 on Monday. But in pre-market trading today, shares were trading up by $0.18 or 2.6 percent.

Lucent's losses are staggering, to say the least. They more than doubled the $3.5 billion in losses reported last week by Nortel Networks (related story).

Bob Woods is the managing editor of OpticallyNetworked.com.