Lucent loss exceeds target
|
|
April 24, 2001: 12:48 p.m. ET
Company says loans to Winstar, writedown of investment hurt 2Q results
|
NEW YORK (CNNfn) - Troubled telecom equipment maker Lucent Technologies reported a larger-than-expected second-quarter loss Tuesday, blaming the bankruptcy last week of one of its biggest customers and the slowing economy.
Lucent (LU: up $1.31 to $10.51, Research, Estimates) has struggled with sharp industry-wide declines for technology products in the slowing economy. The company's wider loss comes in the midst of a strategic restructuring that has included layoffs and other cost-cutting measures.
Its stock, which is well of its 52-week high of $67.18, soared nearly 15 percent in early afternoon trading following the earnings report as investors apparently are satisfied that Lucent's turnaround plan is working and that the worst is behind them.
Brokerage firm Salomon Smith Barney said Tuesday the company's near-term rally is "likely to end up in the low teens."
The company blamed the wider second-quarter loss on last week's bankruptcy filing by wireless telecom Winstar Communications Inc., to which it had made loans, and the writedown of certain investments increased the loss by 15 cents a share in the period.
Murray Hill, N.J.-based Lucent recorded a pro forma loss from continuing operations of $1.26 billion, or 37 cents a share, compared with pro forma earnings of $509 million, or 16 cents a share in the year-earlier period. Analysts on average expected a loss of 23 cents a share, according to earnings tracker First Call.
Second-quarter results exclude a $2.7 billion restructuring charge related to the elimination of 2,000 jobs out of 10,000 planned under the cost-cutting effort announced earlier this year, Lucent said.
Revenue fell 17 percent to $5.9 billion from $7.2 billion a year earlier. That's below the forecast of $6 billion for the period, according to First Call.
Including unusual items, Lucent reported a net loss of $3.7 billion, or $1.08 a share, in the second quarter.
Lucent said the results are a sign that its restructuring program is working.
"These results confirm that we know what we have to do, and we're doing it," Chief Financial Officer Deborah Hopkins said.
Winstar sued Lucent for $10 billion April 18, charging that Lucent breached its contract by not making a payment. Lucent has termed the suit "absolutely frivolous and without an ounce of merit," saying it was Winstar that breached its contract with Lucent. Lucent said Tuesday it is fully reserved for its loans to Winstar.
Lucent, spun off from AT&T (T: up $0.51 to $22.49, Research, Estimates) in 1996, is among the most widely held stocks in the country and was a favorite of analysts until last year, when a string of strategic missteps and profit disappointments led to the ouster of Lucent's chief executive and a major restructuring.
During the past year, its stock has under-performed the Standard & Poor's 500 Index by more than 80 percent.
"As we've said, fiscal year 2001 is a transition and rebuilding year for Lucent," CEO Henry Schacht said in a statement Tuesday.
Lucent said it expects to cut the remaining 8,000 jobs under its restructuring plan by the end of the current quarter
The company also said it cut debt maturing within one year to $2.31 billion at the end of March from $5.01 billion at the end of last year.
Click here for a look at networking stocks
Lucent said it is on target to hit its goal of $2 billion in annualized savings, excluding further reserves for its vendor financing deals.
The company also said it slashed capital spending $100 million more than originally planned and is on track to cut fiscal 2001 capital spending by $400 million.
-- from staff and wire reports
|
|
|
|
|
|