Lucent Expects Q3 Sales Lag

Lucent Technologies reported falling revenue for the third quarter and said its merger with Alcatel is on track to be completed by the end of the year.

Citing lower sales of wireless equipment in North America, the Murray Hill, N.J., networking gear vendor said third quarter revenue was $2.04 billion, down from $2.14 billion the previous quarter, according to a statement.

Lower sales in China were also blamed for declining revenue, which
fell from $2.34 billion a year ago during the same period.

“Our North American mobility business was adversely impacted by a
slowdown in spending on some of our current-generation wireless
solutions,” Lucent chairman and CEO Patricia Russo said in a

Russo said the adoption of CDMA and 3G should help the company recover in the next quarter, assuming Lucent’s EV-DO RevA and HSDPA high-speed data rollouts stay on schedule.

She said equipment EV-DO RevA equipment for contracts with Verizon Wireless and
Telecom New Zealand is on track to be available in September.

The next-generation wireless deployments could make the fourth quarter Lucent’s highest quarterly revenue period for fiscal 2006, Russo said.

Russo also said some of the delays in customer spending were
attributable to the planned merger between Lucent and France’s Alcatel.

Russo, who will become CEO of the merged company, said the merger remains on track to be complete by the end of 2006.

The $13.4 billion merger, announced in April, would create a company worth $25 billion and make a serious challenger for giant rival Cisco Systems.

Russo assured investors the expected $1.7 billion saved by combining forces will materialize in the first two years after the deal is consummated.

More than half of the savings will come from eliminating 9,000 jobs, according to the companies.

In April, Lucent said about 10 percent, or 8,800 workers would be laid off. At the time, neither could say how many U.S. or French workers would be effected. Lucent spokesperson Joan Campion said the reductions will be made across all regions.

Along with job cuts, the remainder of savings will come from cost of goods sold and operating expenses. Eliminating some outside purchases will save $305 million, according to the companies.

Another $488 million will be recovered by converging the Lucent and Alcatel platforms. The companies have also promised customers the migration will be gradual to avoid disruptions.

An additional $122 million in savings were found by eliminating some of the 850 locations spread across the globe, according to the update.

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