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

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

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.

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