Murray Hill, N.J.-based Lucent Technologies Inc. thinks its revenue bottomed out in fiscal first quarter 2002 and
said it expects revenue to rebound in the second quarter.
“We continue to believe that revenues in the first fiscal quarter of 2002 represented the low point for Lucent sales in the current
market downturn,” said Frank D’Amelio, executive vice president and chief financial officer. “For the second fiscal quarter, on a
sequential basis, we expect our top line to improve approximately 10 percent to 15 percent and our bottom line to improve at an even
greater rate.”
The telecom equipment maker Monday reported fiscal first quarter results which showed a narrowed loss and exceeded analysts’
expectations.
Its net loss for the quarter, which ended Dec. 31, was $423 million, about 14 cents per diluted share. In the same period a year
ago, the company reported a $464 million loss, or about 14 cents a diluted share. On a pro forma basis, the company lost 23 cents a
share, compared to a pro forma loss of 42 cents a share in the same quarter last year. Analysts were anticipating a pro forma loss
of 24 cents a share from the first quarter.
Meanwhile, the company, which spent 2001 navigating a slew of difficulties, said it has made “significant progress” in phase two of
its restructuring plan, which aims to make it profitable again in 2002.
“Clearly, the progress we have made proves that we can execute and continues to put us on the path to profitability and positive
cash flow in the current year,” said Henry Schacht, chairman of Lucent.
D’Amelio added that the company believes it will reduce the company’s breakeven point for revenues to $4.25 billion from $4.75
billion by the end of fiscal 2002.
Among the achievements the company has trumpeted since entering phase two in August of last year are:
- It has reduced its expense run rate by $1.6 billion, on top of the $2 billion reduction it achieved in phase one; the company’s
phase two goal is to reduce the expense run rate by $2 billion; - It says it is on track to reduce its annual capital spending rate to $750 million, on top of the $700 million reduction it
attained in phase one;
working capital by $1 billion in fiscal 2002;
outsourcing of some manufacturing operations, divestitures of businesses and attrition; the company’s goal in phase two is to bring
its remaining workforce of 62,000 (excluding Agere), down by another 15,000 to 20,000 positions.
“There has been significant progress with our restructuring,” said newly installed President, Chief Operating Officer and
board member Patricia Russo, who returned to the company in January after a stint as president and chief operating officer at
Eastman Kodak Co. “I intend to support our efforts going forward and build on the momentum we’ve established.”
During the quarter, the company also managed to improve its cash flow on a sequential basis by about $170 million to a use of $113
million, and reduced its total vendor financing commitments to $2.5 billion from $5.3 billion since Sept. 30.
Looking ahead, Lucent plans several new product introductions in 2002.
In the mobility solutions space, the company will introduce SuperHLR, a solution which authenticates, manages and profiles Internet
addresses and other subscriber information for mobile users. Lucent is making an aggressive play in the 3G mobile infrastructure
space. In the first quarter, it completed CDMA 1X voice and data calls in China with China Unicom, and a CDMA2000 1X wireless data
call in the Dominican Republic with Centennial Dominicana. It also began shipping the Flexent OneBTS base station platform, which
supports both CDMA2000 and UMTS, and new elements of the MiLife portfolio of platforms and applications.
Lucent’s also has big product introductions in the works for integrated network solutions. Lucent will begin rolling out its
next-generation Integrated Network Solutions in the second quarter, starting with Lambda Unite, which it describes as “a
cutting-edge optical system that bridges 10-gigabit and 40-gigabit traffic across both core and metro networks. Lucent plans to
follow Lambda Unite with LambdaXtreme, a portfolio of optical systems that will provide both ultra-long-haul and ultra-high-capacity
dense wave division multiplexing (DWDM) in one platform.
Other products planned for 2002 include the TMX880 multiservice switch and a new Lucent Softswitch signaling gateway.
As for Agere Systems Inc., which Lucent unsuccessfully tried to shop around last year, the company said it intends to spin it off as
a fully independent company and accounted for the financial results of that business in the first quarter as discontinued
operations.
“We intend to spin Agere using the results for the quarter ending March 31, 2002, to meet the financial covenants and conditions for
the spin-off,” Schacht said. “While the current market climate introduces a degree of uncertainty about the timing, we remain fully
committed to spinning Agere.”