Lucent Rebounds From 13 Quarters of Losses
MOUNT LAUREL, N.J. (AP) _ Telecommunications gear maker Lucent Technologies turned a quarterly profit for the first time in more than three years, rebounding from a 13-quarter streak of often multibillion-dollar losses.
While the company’s losses have been shrinking in recent quarters, analysts did not expect a profit for the quarter that ended Sept. 30 or the next one. Still, revenues were short of expectations, and the company warned that the profit would not be sustained in coming quarters.
Investors nonetheless responded favorably to the news, pushing the company’s stock up 14 cents, nearly 6 percent, to $2.59 in midday trading Wednesday on the New York Stock Exchange.
The Murray Hill-based company reported net income Wednesday of $99 million or 2 cents per share. The 30 analysts surveyed by Thomson First Call expected a 4-cent per share loss; none of them expected a profit.
A year ago, Lucent reported a net loss of $2.8 billion, or 84 cents per share in the same period last year.
The company has shrunk its losses by becoming a far smaller operation, with 34,500 employees worldwide, down from a peak of about 150,000 three years ago. Through layoffs and other cost-cutting measures, the company has slashed operating expenses to $524 million for the quarter, down 79 percent from $2.5 billion a year earlier.
Revenue for the most recent quarter was $2.03 billion, down 11 percent from the $2.28 billion it brought in during the year-ago period. Analysts surveyed by Thomson First Call expected $2.16 billion in revenue in the most recent quarter.
Lucent CEO Patricia Russo said the company’s restructuring into a smaller firm is essentially complete and that the big layoffs that have marked the firm’s last few years are over.
``We have weathered the storm,″ she said.
The new emphasis, Russo said, will be on growing revenue, but warned that the quarterly profit is not an indication that the company will be able to be profitable in the next few quarters.
``In the current challenging marketing environment, it’s likely we will still have some ups and downs on the way to sustained profitability,″ she said.
For the fiscal year, which also ended Sept. 30, Lucent lost $770 million, or 29 cents per share, down from a loss of $11.8 billion or $3.49 per share last year.
Analysts surveyed by Thomson First Call do not expect the company to make a profit in the new fiscal year, but expect losses to continue to shrink.
Despite the profit, Erik Zamkoff, an analyst with Independent Research Group called the results disappointing, pointing to the lower than expected revenue.
He said cost-cutting and fortunate timing accounted for the profit, something he doesn’t expect to happen in a sustained way until the July-September quarter of 2004.
Paul Sagawa, an analyst with Bernstein, said showing a profit should help Lucent restore an image that took hits when the company admitted three years ago that it had prematurely booked sales in its financial reports. Around the same time, orders from its telecommunications and Internet customers all but halted as those once burgeoning industries struggled.
``This is a company that has been seemingly downgraded with respect to its peers because of its inability to break even,″ he said.
Still, Sagawa expects the company to lose money again in the next one or two quarters before making sustained profits.
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