In rhythm with an economy on the retreat, telecommunications giant Lucent Technologies Inc. seems to be on the decline.
Against a background of outsized estimates, employee downsizing, technological miscues and a haunting investigation of its accounting practices, the company’s credit rating suffered downgrades from two critical agencies.
Both Standard & Poor’s and Moody’s Investor Service cut the ratings for what they regarded as operational problems.
Standard & Poor’s lowered the ratings from BBB+ to BBB- while Moody’s cut its from Baa1 to Baa3. Standard and Poor’s cut its commercial paper rating from A-2 to A-3 while Moody’s cut its rating from prime-2 to prime-3.
These ratings, which placed Lucent a stratum above junk-bond status, will require the company to pay higher interest rates to borrow money by selling bonds or notes.
It was not all bad news for the equipment maker last week. An analyst report published by Mobile Lifestreams bucked the trend by giving Lucent a strong rating in the core technology necessary for the successful rollout of next-generation mobile networks.
The U.K.-based firm said Lucent is strong in CDMA and TDMA technologies, adding that it has installed more than 45,000 CDMA cell sites and more than 160 CDMA networks worldwide. This, it said, positions Lucent well as a W-CDMA and UMTS supplier.
“Lucent has pioneered network-to-network soft handoff among multiple mobile switching centers through high-speed data links, and this core competence will be required in the successful rollout of UMTS,” said Mathias Guetermann, a Lucent expert who will speak at the 3GSM World Congress this week.
The report said Lucent has engaged in UMTS and W-CDMA work with KPN Research of Netherlands, NTT DoCoMo of Japan and AT&T Wireless Services Inc. in the United States.
The equipment maker, which revised estimates four times last year, has had to contend with speculations of takeovers amid worries that it has hit rock bottom.
Lucent also suffered criticism of bureaucratic overload, which some analysts believe is partly the cause for the major accounting error last year currently being investigated by the Securities and Exchange Commission.
Yet, Verizon Communications said it will buy Lucent optical systems, data products, software and services for its networks. This is positive since optical network gear has been a deficient area compared with rivals Nortel Networks and Cisco.
