Lucent posts 11th quarterly loss in row

Sales tumble 42%, but increase is forecast

January 23, 2003|By NEW YORK TIMES NEWS SERVICE

Lucent Technologies Inc., the maker of telecommunications equipment, said yesterday that it expects sales to climb this quarter, even after it reported its 11th consecutive quarterly loss as it continued to face sluggish demand from large phone companies.

The company's loss narrowed to $364 million, or 11 cents a share, in its fiscal first quarter, the three months that ended Dec. 31. That was down from its loss of $423 million, or 14 cents a share, in the comparable quarter a year earlier.

Lucent's sales plunged 42 percent, to $2.08 billion from $3.58 billion a year earlier, as large phone companies around the world spent less on equipment.

Compared with the year-earlier period, domestic and international sales each declined 42 percent, the company said. Still, in an indication of the company's prospects for the year ahead, Lucent said it had won 20 new contracts in the quarter from companies including Tata Teleservices and Reliance Infocom, both of India, and Korea Telecom.

"The market remains challenging and uncertain but we may be moving closer to stability," Patricia F. Russo, Lucent's chief executive, said yesterday.

Lucent's senior executives remain confident that the company can return to profitability by the end of the year, an achievement that hinges on a recovery of sales. Despite three years of revenue declines, Lucent said yesterday that it expects sales this quarter to climb about 20 percent from the last quarter, to $2.5 billion.

Several analysts expressed skepticism about the forecast given the lack of details from large telephone companies about their spending plans this year. They said Lucent may be trying to paint a rosy sales picture ahead of a plan announced yesterday by Frank D'Amelio, chief financial officer, to raise cash through the sale of as much as $1.75 billion in securities.

Russo said in an interview yesterday that Lucent "would never" mislead investors by inflating sales estimates.

Lucent's cash dwindled by $700 million to $3.7 billion during the last quarter, and the company indicated that, despite several waves of cutting costs by reducing its staff, it expects cash-burn to continue, with its cash level declining to $2 billion by the end of September.

Some analysts suggested that Lucent might be turning a corner if sales growth does materialize this quarter. Matt Zolin, a debt analyst with Lehman Brothers, pointed to Lucent's 9 percent increase in sales of wireless equipment in the last quarter and expectations that wireless sales will recover.

"The new international and wireless contracts are an important illustration of how Lucent is still in the game," Zolin said.

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