Advertisment

Lucent posts lower profit, but sees sales growth

author-image
CIOL Bureau
Updated On
New Update

NEW YORK: Lucent Technologies Inc. posted lower quarterly profit but demand for high-speed Internet and optical network equipment lifted sales.

Advertisment

The earnings report marked the second consecutive year of profitability for the communications network equipment maker after a downturn in the telecommunications industry. Lucent has been pushing ahead into more lucrative areas such as high-speed mobile networks and services.

Lucent Chief Financial Officer Frank D'Amelio said in a statement that the company expects fiscal year 2006 revenue to rise on a mid-single-digit percentage basis, roughly in line with Wall Street's average expectation for a 6 percent increase, as tracked by Reuters Estimates.

The Murray Hill, New Jersey-based company said net income in the fourth quarter ended Sept. 30 fell to $374 million, or 8 cents per share, compared to $1.21 billion, or 23 cents per share, in the same quarter a year ago.

Advertisment

Revenue rose 1 percent to $2.43 billion.

"The quarter was pretty much as expected, which is solid profitability and good cash flow," said Edward Snyder, analyst with Charter Equity Research.

In the most recent quarter, Lucent recorded $107 million in gains, or about 2 cents a share, the bulk of which came from income tax items.

Advertisment

Year-ago fourth-quarter results included a $1.0 billion gain, or 19 cents a share, including an income tax benefit of $861 million, or 16 cents a share.

Lucent said it scored several potentially lucrative deals in the past weeks and throughout the quarter, including a four-year agreement announced Oct. 17 to supply Cingular Wireless with network services.

The company has used sales of its high-speed wireless gear to offset a drop in its wireline equipment sales, though some analysts predict that wireless revenue will fall.

Advertisment

Wireless revenue during the fourth quarter fell 7 percent compared to the 2004 fourth quarter, though it was up 12 percent to $4.6 billion for the full year.

Lucent must find a way to deal with industry consolidation and a possible slowdown in third-generation wireless -- or 3G -- investment, Snyder said.

"The problem with Lucent... is that there are too many suppliers and not enough customers," he said. "The customer base has consolidated and spending is starting to decline, so between those two you're not going to have enough to go around."

Shares in Lucent trade at 18.6 times its 2005 earnings, underperforming the Dow Jones U.S. Telecommunications Index, where stocks are trading at more than 22 times their earnings.

tech-news