Lucent Airs Another Crimp in Telco Sector

Putting yet another crimp into the phone equipment sector, Lucent
Technologies said it expects a 10 to 15 percent decline in
revenues for the third quarter, compared to its $3.52 billion second quarter.


The Murray Hill, N.J.-based company, said to be the largest provider of
telecom equipment in the world, cited “continuing market softness.” The
market sent the stock down 11 percent in mid-morning trading, to $2.61, off
34 cents.


The entire sector has been battered as businesses have cut back on spending
while the market downturn drags on and on.


Finnish wireless giant Nokia made money
for its first quarter, but cut its sales forecast for the rest of the year.
Swedish phone maker
Ericsson reported a
loss of $289 million
and said that it would cut roughly 20 percent of its
workforce and try to raise almost $3 billion to cope with its situation.


“Service providers continue to constrain their capital spending to conserve
cash, which is clearly affecting our top line,” said Lucent’s CEO, Patricia
Russo, who pointed out that the company is seeing declines primarily in
wireline systems in North America.


The company said that “while sequential improvement over the (second quarter)
14-cent loss, which excludes a six-cent tax charge, is possible for the third
fiscal quarter, the company feels that it is too early to call given current
market conditions.”


For the six months ending in March, Lucent’s revenues fell 31 percent to $7.1
billion.


“We remain focused on controlling those things we can control and our
aggressive restructuring program continues to produce results …” Russo
said, adding that “when the market turns around, we will be well-positioned
to profitably grow the business.”


Lucent’s CFO, Frank D’Amelio, indicated that the company remains on track
with its restructuring efforts (30,000 jobs are being eliminated) and still
expects to reach an employee base closer to 50,000 by the end of its fiscal
year. The company continues to target a return to profitability and positive
cash flow during fiscal 2003.

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