Lucent Reports $351 Million Loss
TRENTON, N.J. (AP) _ Lucent Technologies reduced its fiscal second-quarter net loss, as revenue fell sharply but the telecommunications gear maker cut operating costs by nearly half from the year-ago quarter.
Murray Hill-based Lucent said Wednesday it lost $351 million, or 14 cents per share, in the quarter ended March 31, excluding costs for retiring debt and paying dividends on preferred stock.
The results included net charges totaling 6 cents per share for items including settlement of shareholder suits and the debt payments, partly offset by income tax benefits and a reduction in prior reserves for restructuring costs. Excluding those items, the per-share loss was 8 cents, 2 cents better than the consensus forecast of analysts surveyed by Thomson First Call.
In the January-March quarter of 2002, Lucent posted a net loss of $495 million, or 19 cents per share.
Total revenues were down 32 percent, to $2.4 billion from $3.5 billion a year earlier.
``The revenues were a little light, compared with what I was expecting,″ said telecommunications analyst Susan Kalla of Friedman, Billings, Ramsey.
However, revenues were up 16 percent from $2.08 billion in the October-December quarter, the first sequential increase in two years for the struggling company.
``This has been an important and in some ways a pivotal quarter for us,″ Patricia Russo, chief executive officer and chairman, told analysts during a conference call. ``While we’re very pleased about the progress we’ve made operationally this quarter, we know we have a lot more to do.″
She noted Lucent had improved its gross margin _ profit after materials and production costs, but excluding sales, administration, research and other expenses _ from 22 percent in the last quarter to nearly 32 percent. That was the result of cost-cutting, higher sales volume and more sales of products with relatively high profit margins.
Operating expenses, which include sales and other overhead, were slashed 45 percent from the year-ago quarter, to $742 million.
In addition, the company eliminated considerable debt and some ``distractions,″ Russo said, most notably by settling 54 shareholder lawsuits for $415 million, or 11 cents per share. The lawsuits alleged company wrongdoing caused Lucent stock to plunge; it has fallen from a high of $84 per share a few years ago to below $2 as the severe telecommunications industry slump and other problems triggered massive layoffs and the sale or spinoff of several businesses.
``There shouldn’t be any debate about whether Lucent has done better and shown solid signs of a turnaround,″ said telecommunications analyst Steve Leavy of Lehman Brothers.
Chief financial officer Frank D’Amelio noted that since last August, Lucent has spent $1.6 billion paying off debt and swapping 621 million new shares of common stock for convertible securities; that will reduce Lucent’s interest and dividend expenses by $125 million a year. The company still has $5.5 billion in debt, most of it long term.
Although they wouldn’t give guidance on revenues and income for the rest of the year, Russo and D’Amelio repeated earlier pledges the company will make a profit by September.
``I have little doubt in my mind that they can do that,″ Levy said.
Kalla said Lucent’s chance of producing a profit by September is ``pretty slim,″ particularly given that two major telephone companies, AT&T and Bell South, said Wednesday that they are cutting expenditures on telecom gear for the rest of 2003.
Lucent again lowered its break-even target _ the point where revenues will cover expenses _ to $2.4 billion a quarter.
D’Amelio said that due to lower expenses Lucent should have $2.5 billion in cash on hand when the fiscal year ends Sept. 30, more than initially expected. By then, the company work force should be down to 35,000, as planned; about, 1,500 jobs were eliminated in the second quarter.
For the first six months of its fiscal year, Lucent posted a net loss of $615 million or 25 cents per share. A year earlier, the net loss was $918 million or 32 cents per share.
Revenues for the first six months were $4.48 billion, down 37 percent from $7.1 billion a year earlier.
``Despite continuing market uncertainty, on a sequential basis we achieved double-digit revenue growth, significantly increased our gross margin, and excluding the impact of certain items, drove a substantial improvement to our bottom line,″ Russo said.
Shares of Lucent closed up 4 cents at $1.72 in trading Wednesday on the New York Stock Exchange.
On the Net: http://www.lucent.com