Earnings Point to More Signs of Delayed Recovery

Despite the upbeat quarterly earnings report from bellwether Intel, high tech companies sang an all-too-familiar song late Tuesday as companies like Motorola and Lucent Technologies continued to push any hopes of a turnaround farther out on the horizon.

Lucent, which has long been the poster child of the ailing telecom industry, said it doesn’t expect to return to profitability until fiscal 2004.

Prior to the revision, the Murray Hill, N.J.-based company was expected to break even in its fiscal third quarter, which just ended in June, and earn one cent per share when its fiscal year ends in the September quarter. The projected loss for will be Lucent’s 13th consecutive quarterly loss.

“In the third quarter, our Mobility revenues were unfavorably impacted by some reduced spending in North America and an unexpected network acceptance delay,” said Lucent Technologies Chief Financial Officer Frank D’Amelio. “These two items accounted for virtually all of the decline.”

Meanwhile, in announcing better-than-expected profits in the second
quarter of one cent a share, Motorola also ratcheted down its projections for the remainder of the year.

“A robust inclination for global business to invest is unlikely to return until there is some reduction in the number of unsettling issues facing decision makers. Most people can rationalize three or four disturbing geo-political or economic challenges, but when the list grows larger, it tends to make many people freeze into a ‘let’s wait and see’ mode,” Motorola’s Chairman and Chief Executive Christopher B. Galvin said in a prepared statement.

To be sure, the statements were consistent with expectations elsewhere in the high tech sector. Analysts already have discounted all hopes of recovery in 2003 for the PC/hardware sector but remain upbeat about prospects for 2004.

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