After enduring a three-year losing streak, Lucent
executives, employees and shareholders finally got some satisfaction from an earnings report, as the company posted a fourth-quarter profit.
“We’ve put a strong foundation in place to grow our business,” Russo said during a conference call this morning. “This continues to be a very challenging environment, but there is reason to look forward with cautious optimism.”
Russo declared the company’s restructuring efforts, which reduced expenses by $5.6 billion, “essentially complete.”
She also sees increasing stability in the overall telecom market, with metro optical, voice-over IP and broadband access and wireless data transfer appearing the most promising. The company is also pleased with the business its services group is winning overseas. For example, it recently won a deal to help rebuild Iraq’s telecom infrastructure. Traditional wireline business, however, continues to contract, she said.
The Murray Hill, N.J., telecom equipment maker reported a fourth-quarter profit of $99 million, or 2 cents per share, compared to a loss of $254 million, or 7 cents per share, during the same period last year and loss. Analysts surveyed by Thomson First Call expected a loss of four cents per share in the fourth quarter.
Enthusiasm for the pace of Lucent’s recovery was tempered somewhat by revenue figures that came in slightly below expectations. Revenues were $2.03 billion, an increase of 3 percent from the $1.96 billion during the previous quarter, but down from $2.28 billion in year-ago quarter.
Erik Zamkoff, senior communications analyst at IRG Research, lowered his fiscal 2004 revenue estimate to $8.5 billion from $8.7 billion.
Frank D’Amelio, Lucent’s CFO, wouldn’t offer specific guidance, but said the company expects to achieve sustainable profitability in this fiscal year with revenues flat or increasing slightly.
Analysts with SG Cowen’s telecom group were encouraged by Lucent’s profitability. The better-than-expected showing reinforces SG Cowen’s preference of Lucent over competitor Nortel Networks
Lucent’s results, and Russo’s comments confirm what other equipment makers and industry watchers have been saying during the last six months: The market, while no where near booming like in the late 1990s, is showing signs of life. Carriers are spending on upgrades for Internet Protocol systems and mobile technologies.
Given the last three years, Russo and company are more than happy to take slow and steady rise in business.