Lucent posts Q3 loss, more jobs to be cut

MURRAY HILL: Struggling telecommunications equipment giant Lucent

Technologies Inc. on Tuesday posted a third-quarter loss and said it would cut

its work force by another 15,000 to 20,000 jobs as part of a restructuring to

return to profitability in fiscal 2002.

The Murray Hill, New Jersey-based company said in the quarter it lost $1.89

billion, or 55 cents a share, including a $684 million restructuring charge and

amortization of goodwill and other acquired intangibles. That compared with net

income of $286 million, or 9 cents a diluted share, last year.

Lucent also said the second phase in its restructuring plans will result in a

charge of $7 billion to $9 billion in the fourth quarter related to the job and

product cuts and asset write-offs. The firm, which employed 104,000 people at

the end of March, said it intends to return to profitability and positive cash

flow during fiscal 2002.

The company also intends to cut its capital spending by another $750 million,

improve working capital performance by an additional $1 billion and drive out

another $2 billion in annual expenses. It also will eliminate its dividend,

freeing up about $68 million a quarter for other business uses.

Lucent said earnings from continuing operations fell to a loss of $1.2

billion, or 35 cents a share, compared with a profit of $776 million, or 23

cents a share, in the same period last year. Analysts had expected the company

to lose 21 cents a share, with a range of a 9-cent loss to a 39-cent loss,

according to Thomson Financial/First Call.

Revenues from continuing operations fell 21 percent to $5.82 billion from

$7.41 billion last year. Lucent said it had exceeded its target for work force

cuts, with the elimination of more than 10,500 positions since January.

Additionally, in July, more than 8,500 employees accepted a voluntary retirement

offer. Lucent expects to take a non-cash charge of about $1.2 billion in the

fourth quarter for termination benefits in connection with this voluntary offer.

Since January, when its restructuring was launched, Lucent's shares have

underperformed the Standard & Poor's 500 index by 37 percent, but

outperformed the S&P Communications Equipment index by almost 27 percent.

Including the loss from discontinued operations, Lucent posted a net loss of

$3.25 billion, or 95 cents a diluted share, compared with a net loss of $301

million, or 9 cents a share, in the year-ago quarter.

The telecom equipment sector has been hurt drastically by the slowdown in

customer spending. Lucent’s competitor, Nortel Networks Corp. last week

delivered a stinging $19.4 billion second-quarter loss as revenues declined. At

the same time, Lucent has dealt with its own problems, including a heavy debt

load and a bloated work force that has forced heavy cuts and unit sales.

Lucent had said in January that its results would improve every quarter

through the rest of the year. In the second quarter, it reported a loss from

continuing operations of $1.26 billion, or 37 cents a share, on revenues of $5.9

billion.

(C) Reuters Limited 2001.