Lucent chairman: 2002 will be challenging

CHICAGO: Lucent Technologies, Inc., the world's largest telecommunications

equipment maker, faces a "challenging" environment in fiscal 2002,

chairman Henry Schacht said in a letter to shareholders. "Our operating

environment in the coming year will remain challenging," he said in the

company's 2001 annual report, which was mailed to shareholders and posted at the

company's Web site on Thursday.

He also reiterated that the Murray Hill, New Jersey-based company has more

than adequate financial resources to complete its turnaround. The company, as

recently as last month, has said it expects to return to profitability in fiscal

2002.

Lucent launched its restructuring last January and has since slashed its work

force to about 77,000 from 106,000 with plans to further reduce that to as low

as 57,000. It also posted multibillion-dollar losses during fiscal 2001, killed

money-losing or low-profit product lines, and sold off non-core businesses. The

company's intention is to remake itself into a smaller, leaner supplier focused

on the largest telephone carrier customers, who have best weathered the economic

slowdown.

Lucent said last month it saw a fiscal first-quarter loss that was larger

than Wall Street was expecting due to falling sales amid the prolonged customer

spending slump. The company said it believes the first quarter will mark the low

point of the market downturn for its revenues. Lucent also has said it expects

spending by its major telecom customers to fall 20 per cent to 25 per cent in

2002, although overall global spending will remain at a high level.

Since the beginning of last year, when Lucent launched its restructuring, its

stock has outperformed peers in the Standard & Poor's Communications

Equipment Index by about 19 per cent.

© 2002 Reuters Limited.