CHICAGO-Lucent Technologies Inc. further dampened Wall Street zeal with its announcement that it would not see black until next year, citing poor demand for its products.
The company said it expects revenues for its fiscal third quarter to fall by approximately 18 percent from $2.4 billion in the second quarter.
“In the third quarter, our Mobility revenues were unfavorably impacted by some reduced spending in North America and an unexpected network acceptance delay,” said Chief Financial Officer Frank D’Amelio. “These two items accounted for virtually all of the decline.”
Lucent said it disbursed a “modest amount of cash” in the quarter, which will put its balance at $4.9 billion in cash.
The vendor, which has slashed its work force by more than half, did not indicate any plans for further layoffs, although analysts expect its staff to be cut even lower than its 35,000 projected for September. The staff figures at of end of March stood at 38,500.
“Lucent faces an uphill battle, as the telecom capital expenditure environment remains challenging,” wrote IRG Research on the telecom giant, noting that it expect the company to return to profitability in the third quarter of 2004.
UBS Warburg, however, does not expect it to break even until first quarter of 2005.
UBS said it expects the company to have a 28-percent gross margin for the quarter, down from its previous assumption of 31 percent. It attributes much of the poor showing to Verizon Wireless, which slowed down new purchases in the near term after a large delivery in March. It also singles out India’s Reliance as the network acceptance delay.
“We expect sales to Verizon Wireless to pick up somewhat in the second half of the calendar 2003,” wrote UBS Warburg in a research note, adding that revenues will decline because of the expected completion of “current major deployments in the U.S., China and India while outlook for new projects (e.g. EV-DO in North America and 3G in China) remains unclear.”
