Caution chastened optimism in vendor earnings.
While companies like Qualcomm Inc. and Siemens AG enjoyed profits, others like Lucent Technologies Inc. and Nortel Networks Ltd. didn’t fare as well.
Ahead of its earnings report, Lucent had retracted an earlier optimistic projection to turn a profit this year, citing a soft market. The company posted a net loss of $254 million, or 7 cents per share, compared with a loss of $351 million, or 14 cents per share, in the previous quarter. In the same period last year, Lucent suffered a loss of $8.03 billion, or $2.35 per share.
The company maintains some optimism, nonetheless.
“Despite a decline in Mobility revenues this quarter, we were able to continue our progress on the bottom line,” said company Chairman and Chief Executive Officer Patricia Russo.
The company recorded revenues of $1.96 billion in the quarter, which represented an 18-percent drop from a fiscal second-quarter figure of $2.4 billion.
“The mobility shortfall was primarily due to a delay in revenue recognition related to a large international project as well as a slowdown in spending by Verizon and other North American carriers,” wrote UBS Warburg in a research note.
The company said it had $4.9 billion in cash and short-term investments as of June 30.
“We clearly have more work to do given the continuing market uncertainty, and we are developing plans to lower our breakeven so that we can return to profitability as soon as possible in fiscal 2004,” said Frank D’Amelio, chief financial officer.
Basking nearly alone, Qualcomm Inc. posted a third-quarter net profit of $192 million compared with a loss of $14 million at the same time last year. Its earnings per share were 23 cents compared with 2 cents per share a year ago.
The company had increased its dividend to its shareholders by 40 percent.
“Our business generates excellent positive cash flows at the same time revenues and earnings continue to grow,” said Irwin Jacobs, chairman and CEO of Qualcomm. “During the third quarter, we announced several new multimedia chips and the industry-leading MSM7xxx family of chips to further strengthen our product road map and support our customers.”
Qualcomm posted revenues of $922 million, a 20-percent rise from the same period last year.
The company said its research and development expenses rose 15 percent to $136 million.
Nortel Networks, which enjoyed a profit in its previous quarter, could not sustain it in the second quarter. It suffered a net loss of $14 million, or zero cents per common share, compared with net earnings of $54 million, or 1 cent per common share in the first quarter. In the year-ago period, the company had a net loss of $697 million, or 20 cents per common share.
“Our second-quarter results reflected the continued cautious spending exhibited by our customers,” said Frank Dunn, president and CEO of Nortel. “Although the industry conditions remained difficult, our momentum and leadership position continued across our key focus areas. We continued to engage and create value for our customers, focusing on the growth opportunities and leveraging our technology and solutions leadership.”
The company said it is enjoying momentum in wireless data as evidenced by its four-year agreement with T-Mobile USA as well as Cingular Wireless.
Siemens AG posted a third-quarter profit of $632 million, a drop from a year ago when the vendor enjoyed a profit of $829.4 million.
Sales also fell 15 percent to $19.8 billion. Siemens’ mobile business posted a profit of $19.4 million on sales of $2.4 billion.
“While the absence of demand in key markets combined with significant currency translation effects lowered sales and orders year-over-year, the trend is more gradual on a consecutive quarter basis,” said Chief Executive Heinrich von Pierer.
