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Lucent misses 4Q targets
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October 23, 2001: 10:57 a.m. ET
Losses larger, sales weaker than expected for telecom equipment maker.
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NEW YORK (CNNmoney) - Lucent Technologies Inc. Tuesday posted a fiscal fourth-quarter loss that was larger than Wall Street expectations on weaker-than-forecast revenue.
At the same time, the beleaguered telecom equipment maker offered investors a promise that the fiscal year that began this month could be brighter.
Before the U.S. markets opened, Lucent said it lost $909 million, or 27 cents a share, in the quarter ended Sept. 30. That excludes extraordinary charges and compares with an operating profit of 10 cents a share during the same quarter last year.
Analysts on average had expected Lucent (LU: down $0.31 to $6.59, Research, Estimates) to report a loss of 23 cents a share for the latest quarter.
Accounting for restructuring charges and a loss from discontinued operations, Lucent's net loss for the quarter was $8.8 billion, or $2.59 a share.
At $5.2 billion, Lucent's fiscal fourth-quarter revenue fell 28 percent from $7.2 billion in the year-ago quarter.
Lucent, a leading supplier of telecommunications and networking equipment, has been especially hard hit by the economic slowdown in the U.S., which has prompted many telecom service providers and large corporations to either cancel or defer their new-equipment purchases.
As part of an effort to stem its mounting losses, the company has been shedding its non core businesses and using layoffs and outsourcing to cut costs.
Executives of Lucent previously had said the company's operating results would improve every quarter this year. It lost $1.2 billion, or 35 cents a share, in the fiscal third quarter.
"Despite the short-term weakness in the market, we believe that our Phase II restructuring actions will drive our return to profitability and positive cash flow in fiscal year 2002," Chairman and CEO Henry Schacht said.
"All along, we've said fiscal 2001 would be a rebuilding year for Lucent," he added.
The company has not provided specific revenue or earnings projections. The most recent consensus estimate of analysts polled by First Call is for Lucent's operating loss to narrow to 15 cents per share in the current quarter, ending in December.
For the full fiscal year ending in September 2002, estimates currently are for a loss of 37 cents per share. Lucent has said it expects to turn a profit in fiscal 2002.
Lucent said it expects an overall market decline of 15 percent to 20 percent in 2002, while its targeted market will be off 10 percent.
And while the company said it does expect earnings to improve in the current quarter from the prior quarter, it noted that revenue will show a sequential decline.
"We believe our revenues will improve in the second fiscal quarter of 2002. In fact, we are seeing early signs of increased customer spending in some segments of our business for that quarter," Schacht said. "This isn't surprising because even our customers' reduced forecasts for calendar 2002 are still higher than their rate of spending in the current quarter."
The company said the lower anticipated spending levels are a result of increased uncertainty after the Sept. 11 terrorist attacks on the United States and the military campaign the U.S. has launched in response to them.
The company said it is targeting a capital spending rate of $750 million in fiscal 2002, down from a planned $1.5 billion in the current year.
Additionally, Lucent said it is on track to cut its work force to between 57,000 and 62,000 employees by the end of March, in line with previous estimates of 55,000 to 60,000. Its payroll numbered 77,000 on Sept. 30.
During the fiscal fourth-quarter, Lucent said it cut an additional 10,000 jobs, bringing the total number of cuts so far to 18,500.
Lucent, whose balance sheet also has come into question by some analysts recently, said it ended the fiscal fourth-quarter with a cash balance of $2.4 billion, with $1 billion outstanding against its $4 billion in available credit facilities.
Lucent still is awaiting the closure of the deal to sell its fiber cable unit to Japan's Furukawa Electric Co. Ltd. and Corning Inc. (GLW: up $0.35 to $8.40, Research, Estimates) for a combined $2.75 billion. Some analysts also worry Lucent may be forced to write off more bad customer financing loans. Earlier this year, Lucent said WinStar Communications Inc. (WCII: Research, Estimates) had defaulted on a loan. It also wrote off a loan made to Australia's One.Tel Ltd. 
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