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Lucent lags in heavy trade
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January 7, 2000: 20:00 p.m. ET
Telecom gear firm hit by profit warning; rivals ready to take up the slack
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NEW YORK (CNNfn) - Rivals of Lucent Technologies Inc. rallied Friday, a day after shares of the top telecommunications equipment maker plummeted in after-hours trade following an earnings warning.
Lucent, the nation’s most-widely held stock, plunged after the company said after the end of New York Stock Exchange trading its earnings will fall nearly one-third shy of analysts’ targets due to changes in customer buying patterns.
At the end of Big Board trading Thursday, Lucent traded at $69 a share before the announcement. The stock sank 28 percent by the end of NYSE Composite trade, which includes the results from NYSE-affiliated regional exchanges.
But by Friday, the stock stabilized a bit, closing up 2 at 54.
Several Lucent competitors, such as Nortel Networks (NT), Ciena (CIEN), Cisco Systems (CSCO) and Motorola (MOT) were caught in the after-hours downdraft.
But the companies rebounded after Lucent told analysts its woes are company-specific. Several competitors also stepped forward to reassure Wall Street that their earnings pictures wouldn’t be hurt.
"Lucent’s first words out of its mouth [during a conference call Thursday] were this was Lucent’s mess-up, not an industry thing,” Charles DiSanza, an analyst at Gerard Klauer Mattison, said.
Shares of Nortel rose 14-1/16 to close at 91-1/16, Ciena closed up 11-7/8 at 57-3/4, Motorola closed up 9-3/16 at 128-13/16, and Cisco rose 5-7/8 to close at 105-7/8.
Smaller fiber-optic companies such as JDS Uniphase Corp. (JDSU), SDL Inc. (SDLI) and E-Tek Dynamics Inc. (ETEK) also were up. Schroder & Co. upgraded JDS and SDL Friday morning.
Lucent said in its Thursday statement its woes stemmed from a change in its customers’ buying patterns, causing its fiscal first-quarter earnings to come in between 36 cents and 39 cents per share.
That’s about a third less than the 54 cents a share expected by analysts surveyed by First Call Corp. Lucent (LU) earned 48 cents a share in the year-earlier quarter.
Analysts rushed to downgrade Lucent. CIBC World Markets, Lehman Brothers, SG Cowen and Salomon Smith Barney all cut recommendations to neutral. Merrill Lynch & Co. maintained its long-term buy rating, although it cut its short-term rating to neutral from accumulate.
But not all analysts were bearish on the stock. Robert Wilkes, a telecommunications analyst at Brown Brothers Harriman, said in an interview on CNNfn Friday that he thinks Lucent could bounce back.
"It was an execution issue in the latest quarter, shortages of components, inadequate anticipation of a shift in the demand on the part of their customers from lower-speed, lower-capacity fiber to higher-capacity fiber," he said. "I think that they will be able to move, to fix it as we move through the balance of the year and ramp up production pretty substantially." 
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