Beleaguered networking concern Lucent Technologies has cut
its quarterly revenue expectations, and said the path to profitability will
be a longer one than first thought.
Lucent has previously said it expected to return to profitability in fiscal
2002. But “large service providers continue to reduce or defer their
spending as they rethink their business plans and conserve cash, which is
having an impact on our top line,” said Lucent Chief Financial Officer Frank
D’Amelio, in a statement.
Because of the softness in the market, Lucent’s “return to profitability and
positive cash flow (will) slip into fiscal year 2003,” he also said.
“We are moving as swiftly as possible to return to profitability and
positive cash flow,” said Lucent President and Chief Executive Officer
Patricia Russo. “We will continue to monitor the market and, if necessary,
take the appropriate actions to continue to align Lucent with current market
conditions.”
The consensus of analysts surveyed by Thomson Financial/First Call had
Lucent reporting a loss of $0.14 per share, and a loss range of between
$0.06 and $0.24.
Lucent has closed plants and offices, slashed tens of thousands of jobs and
spun off business units during the telecom sector’s hard times, in an effort
to get back into the black.
The company also said it now expects revenues to show an up to 10%
improvement on a sequential basis for the second fiscal quarter, down from
previously announced guidance of sequential improvement in the top line of
10% to 15%. Lucent released the 10% to 15% figures about three weeks ago.
Lucent said it will update its guidance when it releases its financials for
the second quarter on April 22.
Murray Hill, N.J.-based Lucent also blamed current market conditions for a
delay in the spinoff of Agere Systems Inc. While the company says it is
“committed to completing the spinoff,” it will not be able to use the
results from the second fiscal quarter to meet the performance conditions,
as defined under the company’s credit facility, necessary to complete the
spinoff of Agere.
The earliest Lucent sees the spinoff happening is the third fiscal quarter.
Lucent intends to apply for a supplemental ruling from the Internal Revenue
Service that the spinoff of Agere will be tax-free to Lucent and its
shareholders despite the delay in the spinoff. The company added it “is
confident that it will obtain such a ruling.”
Lucent has “sufficient liquidity to fund its operations and business plans
and has no outstanding balance on its credit facility,” officials said.
However, the company is continuing to “consider opportunities to raise
additional capital in order to further strengthen its balance sheet and
provide for more excess liquidity. Lucent may pursue a financing
transaction, most likely a convertible offering, “as soon as market
conditions permit”
Also, Lucent continues to believe it can achieve gross margins in the 20%
range for the second fiscal quarter. It also remains optimistic that it will
reach its target of 35% in gross margins during fiscal 2003 through improved
sales volumes and product mix, reduction of one-time items, continued
implementation of cost reductions, market and product rationalization work
and new product rollouts.
Lucent Revenues To Fall Short
