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Wireless Wins Lift Lucent

UPDATED: Rollout of third-generation wireless networks in the United States helped Lucent Technologies meet its second-quarter financial targets.

In addition, the equipment maker said it will combine mobility and wireline units to speed product development and trim costs. Lucent's services unit will remain a separate group.

For the first three months of the year, Lucent tallied $2.34 billion in revenues, flat from the previous quarter, and up 6 percent from the same period last year.

Earnings were $282 million, or 6 cents per diluted share, up from $174 million, or 4 cents, in the first quarter and $68 million, or 2 cents per diluted share, in the year-ago quarter.

"The industry has stabilized and started to grow," Patricia Russo, Lucent CEO, said in a conference call. "There are opportunities, but there are also challenges. The greatest near-term opportunity is wireless."

She noted that U.S. carriers are on track with their 3G network rollout and that new systems carrying voice, data and video at broadband speeds bodes well for Lucent.

Revenue in the mobility group was $1.2 billion during the quarter, up 4 percent from the previous quarter and 24 percent from the same period last year.

Russo was also pleased with the company's services unit, which tallied close to $500 million in revenues. She believes Lucent's ability to set up and manage complex networks is a competitive edge over newer rivals -- particulary those from Asia -- who may offer lower-cost equipment.

Other areas that Lucent is investing in include next-generation optical, Voice over IP , the government sector and emerging markets.

On the downside, Lucent said revenue for its Integrated Network Solutions (INS) business, which includes gear for wireline telecom carriers, slipped to $589 million, a decrease of 9 percent sequentially and 18 percent compared with the year-ago quarter.

The wireline offerings are slower to upgrade to new technologies. Lucent has cut about 800 jobs since January, most of them from this unit, to try and balance the slipping revenue on the balance sheet.

Russo said the reorganization announced today should make the company more efficient. Cindy Christy, former president of Lucent's mobility unit, will head the combined business that will be called the network solutions group.

Janet Davidson, former president of Lucent's integrated network solutions unit, becomes head of corporate strategy and business development.

Lucent also welcomed back Jeong Kim who rejoins the company as Bell Labs president. The former CEO and founder sold Yurie Systems to Lucent in 1998. He will succeed Bill O'Shea, who will retire after 33 years with the company.

Later in the day, Juniper provided further support for Russo's view that the telecom equipment market is stabilizing.

The Sunnyvale, Calif., router maker posted revenues of $449.1 million, nearly double the $224.1 million it took in during the same period last year. Net income was $75.4 million, or 13 cents per share, over $33.5 million, or 8 cents per share, for the year-ago quarter.

Juniper, whose primary competition is Cisco , said business demand was strong from both service providers and enterprise customers who are increasingly moving to a single IP network to handle voice and data.