MURAY HILL, N.J.—Lucent Technologies Inc. says weakened North American wireless sales coupled with the delay in China’s third-generation network buildout caused the company’s second-quarter earnings to fall 32 percent.
Lucent posted a second-quarter net income of $181 million from $2.14 billion in revenues. The company’s revenues are down 8 percent from its year-ago quarter, when Lucent posted net income of $267 million from revenues of $2.34 billion.
“Although our North American revenues for the first half of fiscal 2006 are slightly below the year-ago period, the fundamentals of the business remain solid,” stated Patricia Russo, chairman and chief executive officer at Lucent.
Looking forward, Russo said “We expect wireless deployments in North America to build through the remainder of the year, with an acceleration in the fourth fiscal quarter around UMTS and EV-DO Rev. A deployments. We continue to expect growth across our portfolio in the Caribbean and Latin America region during the second half of the fiscal year, and we expect a ramp-up in network transformation projects in Europe as well. Offsetting these favorable trends, however, we expect a $500 million revenue decline in China and India for this fiscal year, driven primarily by declines in PHS sales and delays in the issuance of 3G licenses in China, and to a lesser extent our selective participation in highly competitive market opportunities in India.”
The wireless infrastructure industry has been waiting anxiously for the Chinese government to award 3G licenses to carriers so that construction of the advanced networks can begin. The government is expected to grant 3G licenses later this year as testing of its homegrown 3G technology, TD-SCDMA, nears completion. Most analysts expect China to eventually support both W-CDMA and TD-SCDMA networks.
Regarding Lucent’s upcoming acquisition by Alcatel, Russo said the company is on track to wrap up the deal within six to 12 months.
“Given the pending merger with Alcatel, we are discontinuing our practice of providing specific annual guidance,” said Lucent’s Chief Financial Officer John Kritzmacher. “We will continue to focus on improving our operational performance as we prepare for successful integration with our merger partner.”
Alcatel plans to release its second-quarter financial results April 27.
Wall Street didn’t seem too rattled by Lucent’s earnings report as the company’s stock traded down 5 cents at $2.92 per share during mid-day trading.
