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3G, VoIP Boosts Lucent

Lucent Technologies said orders for 3G wireless equipment helped drive its fourth consecutive profitable quarter.

The third-quarter results come on the heels of a $5 billion contract to supply Verizon Wireless with gear to deliver high-speed data, voice and video content to its phone and PDA customers.

Verizon Wireless' network upgrade could spark other carriers to follow suit, Lucent CEO Patricia Russo said in a conference call with analysts this morning. AT&T Wireless yesterday said it offers 3G in Detroit, Phoenix, San Francisco and Seattle.

Across all its businesses, Lucent tallied a net income of $387 million, or 8 cents per share, during the third-quarter, up from a loss of $254 million, or 7 cents per share, for the same period last year. Revenue was up 12 percent to $2.19 billion from $1.96 billion in the third quarter of 2003. Cost cuts and old lease settlements contributed to the increase.

During the quarter, Lucent announced 35 customer wins and trials spanning 20 countries around the world, including emerging markets Pakistan and Vietnam.

Besides 3G, the company touted progress in several growth areas. Sales of the company's Accelerate VoIP portfolio are promising, Russo said. There are now 20 customers, including BellSouth , which is using the offering to deploy VoIP services in nine states.

Lucent's VoIP hand will be strengthened this quarter as it finalizes the purchase of softswitch maker Telica.

Another new opportunity is a recent partnership with Microsoft to develop Internet Protocol TV (IPTV) offerings for broadband networks. Deployment of this equipment will allow telecoms to deliver a voice, high-speed data and video bundle to better compete with cable rivals.

Just this week, Verizon announced that it will offer TV to its FTTP customers starting next year. It did not say which vendor will supply the necessary network equipment.

"We're engaged in conversations and are [demonstrating IPTV] in several places," Russo said. "Our job is to translate that into contracts and revenue.

Compared to last quarter, Lucent's services slipped a percentage point. However, it was up 5 percent compared to the third quarter of 2003. Sales in the company's Integrated Network Solutions unit, which includes optical products, were off 3 percent from last quarter and 12 percent from the same quarter a year ago.

Although the market is more stable than it has been in years, there are still other uncertainties looming for Lucent. Last month, talks between the company's union workers over a new contract broke down. The existing contract ends Oct. 31, and the company said it will resume talks shortly. They did not speculate on the possibility of a strike.