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Lucent affirms, stock jumps
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June 5, 2001: 4:32 p.m. ET
Ailing telecom gear maker says turnaround plan working; stock up 8%
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NEW YORK (CNNfn) - The top executive of Lucent Technologies, a leading telecommunications equipment maker, reaffirmed the company's financial guidance for the current quarter Tuesday, citing progress in its restructuring plan.
Henry Schacht, the Murray Hill, N.J.-based firm's chairman and chief executive, said Tuesday the company anticipates "modest sequential growth" in the current quarter, its fiscal third, over the $5.9 billion in revenue it reported in the second quarter.
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 CNNfn's Steve Young has more on Lucent including part of the interview with Lucent CEO Henry Schacht. |
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Schacht also said Lucent expects "greater sequential improvement" over the 37 cents per-share loss it logged in the second quarter.
The most recent consensus estimate of analysts polled by earnings tracker First Call is for Lucent's third-quarter revenue to come in at roughly $6.1 billion and its loss to be 21 cents per share.
Lucent's forecast and the First Call estimate is for a "pro forma" loss from Lucent's continuing operations, excluding one-time charges and other extraordinary charges.
Shares of Lucent (LU: up $0.49 to $8.49, Research, Estimates), which are among the most widely held in the United States, jumped about 8 percent Tuesday as investors took the announcement to heart. The company's shares have plummeted in the last year to about $8 from $67.
As have most supplier of telecom and data-networking equipment, Lucent's business has been hurt by the slowing U.S. economy, which has prompted many of its customers, especially telecommunications service providers, to either defer or cancel their new-equipment orders.
In addition to the overall slowdown, Lucent's business has been faced with a number of other financial woes, including the recent bankruptcy filing by wireless telecom Winstar Communications, to which it had made loans.
The company has been implementing a broad restructuring plan in an effort to return to profitability. Itself a spinoff of AT&T, Lucent recently has spun off its enterprise networks business, called Avaya (AV: up $0.04 to $16.59, Research, Estimates), and its microelectronics unit, now called Agere Systems (AGR: Research, Estimates).
The company also has been cutting costs through layoffs and other restructuring. Lucent is expected to cut another 5,000 jobs and is offering a buy-our or early retirement plan to mid-level managers in the U.S., the Financial Times.com reported late Tuesday. Lucent has already reduced staff by 10,000.
Lucent's guidance comes a week after its planned merger with France's Alcatel SA collapsed. Lucent has been looking for a buyer since its failure to take the lead in new high-speed telecommunications equipment has hurt profitability.
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Henry Schacht
Chairman and CEO, Lucent Technologies | |
Schacht told CNNfn Tuesday that the negotiations broke down because it became apparent that the deal was being looked at as an acquisition, not a merger of equals, which Schacht said would pose too great an execution risk during the transitional phase. (335K WAV) or (335K AIFF)
He added that the company's willingness to walk away from the Alcatel deal is a sign of the company's confidence in its turnaround plan.
He also said that the company he would not rule out further job cuts to reduce costs.
"Never say never," Schacht said, adding that cost reductions will accelerate and that the company expects to achieve $2 billion in cost savings by the end of 2001. 
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Lucent
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