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Lucent beats estimates
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October 23, 2000: 6:25 p.m. ET
Communications equipment giant beats lowered earnings estimate for 4Q
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NEW YORK (CNNfn) - Communications equipment giant Lucent Technologies, which earlier Monday ousted its chairman and CEO, reported fourth-quarter earnings that were ahead of analysts' reduced expectations.
Murray Hill, N.J.-based Lucent (LU: Research, Estimates) said after the market close Monday that its fiscal fourth-quarter net income declined to $600 million, or 18 cents per share, from $768 million, or 24 cents, in the same period last year. That was 1 cent per share above the mean analyst estimate, according to First Call.
Lucent's reported results were in line with the announcement the company made on Oct. 10, saying that it expected its fourth-quarter earnings to be lower than its previously announced guidance.
Lucent's fourth-quarter revenue from continuing operations rose 14.6 percent to $9.4 billion from $8.2 billion.
"We are clearly disappointed in our results for fiscal year 2000," said Henry Schacht, who was named Lucent chairman and CEO on Monday. "We are looking at fiscal year 2001 as a transition and rebuilding year for Lucent. Lucent remains a company with world-class products, people and knowledge of networks, and we are fortunate to compete in one of the world's leading growth markets."
 "We have already begun a number of initiatives to sharpen our execution, reduce complexity and increase our efficiencies," said Deborah Hopkins, Lucent's chief financial officer, in a statement. These initiatives include reviewing the company's product line, consolidating corporate infrastructure, re-deploying marketing and sales resources, improving supply chain management, and implementing a new customer ordering system, Hopkins said.
Lucent has issued four earnings warnings this year, causing its stock to drop 72 percent from its 52-week high of $84.18. In response, Lucent on Monday ousted its chairman and chief executive officer, Richard McGinn, and named Schacht as an interim replacement while it searches for new talent to fill the top slot.
Lucent lowers first-quarter forecast
Looking forward to the first quarter of fiscal 2001, which ends Dec. 31, Lucent said it expects pro forma revenue from continuing operations to decline about 7 percent from the prior year, and pro forma earnings per share from continuing operations to break even. The company also said it expects results from operations to improve sequentially each quarter for the rest of the fiscal year. This guidance does not include the effect of plans for a business restructuring charge.
Hopkins said that Lucent will provide revised guidance for fiscal year 2001 when it reports its first fiscal quarter earnings in January.
In the fourth quarter, Lucent was hurt by lower-than-expected revenues and gross margins in its optical networking business, primarily because it was late to market with a high-end fiber optic technology called OC-192, which is an optical network channel capable of carrying 10 gigabits per second.
The company also experienced lower-than-expected revenue and margins from switching products it sells to telephone companies. Separately, Lucent increased its reserves for bad debt as some of the emerging telephone companies to which it extended credit became financially troubled.
In the fourth quarter, sales to telephone companies and Internet service providers increased by 4.8 percent to $7.2 billion, driven by growth in the company's Internet infrastructure and professional services businesses. Service provider revenue in the United States increased 3.4 percent, after being hurt by a decline in sales to one customer. Without that one customer, which Lucent didn't name, sales within the United States would have increased 21 percent quarter over quarter, the company said.
Lucent's stock closed Monday down 56 cents at $22.06 
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