/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsCHICAGO: Telecommunications equipment maker Lucent Technologies Inc. posted
an $8.8 billion fourth-quarter net loss on Tuesday, mostly due to a massive
restructuring charge amid a bruising industry slowdown.
Lucent, in the process of nearly halving a work force that numbered 106,000
in January, has been paying the price for its own missteps in manufacturing and
product development, as well as management turnover and intense competition.
It also has been hammered by the industry-wide slowdown that has led to
multibillion-dollar losses and charges at rival Nortel Networks Corp. and
fiber-optic powerhouse JDS Uniphase Corp.
Lucent, based in Murray Hill, New Jersey, lost $8.8 billion, or $2.59 a
diluted share, including an $8 billion restructuring charge and a $1.5 billion
loss from its former Agere Systems Inc. unit, offset partly by a gain from the
sale of its power business. That compared with a net loss of $484 million, or 14
cents, in the same period last year.
Sales in the quarter fell 28 per cent to $5.2 billion. "This to me was a
very comforting set of numbers," Lehman Brothers analyst Steve Levy said.
"It shows that even in a really negative telecom equipment market they can
hold their own."
He lauded the restructuring's progress, including staying on track to sell
its fiber unit to ease liquidity concerns.
A rebuilding year
Lucent's shares, which have lost more than 90 per cent of their value in the
last two years, closed off 25 cents, or 3.6 percent, at $6.65 in New York Stock
Exchange trading.
Since the beginning of the year, when Lucent launched its restructuring, the
stock has underperformed the Standard & Poor's 500 index by about 40 per
cent, but outperformed its peers in the S&P Communications Equipment index
by about 28 per cent.
Lucent chairman and chief executive Henry Schacht said the company expects to
return to profits and positive cash flow in fiscal year 2002, despite the
current economic weakness. "All along, we've said fiscal 2001 would be a
rebuilding year for Lucent," he said.
Excluding the charge and other items, Lucent lost $909 million, or 27 cents a
share, in its fiscal fourth quarter compared with a loss of $11 million, or nil,
a year earlier. Analysts had expected the company to lose 23 cents, with a range
of 14 cents to 34 cents, according to Thomson Financial/First Call, which tracks
such data.
Lucent, which was spun off from telecom and cable giant AT&T Corp. in
1996, had said previously its operating results would improve every quarter this
year. It lost $1.2 billion, or 35 cents a share, in the third quarter.
Schacht said the company expects to improve its first-quarter earnings from
the fourth quarter, while revenues will decline from the fourth quarter. With
early signs of increased customer spending in some businesses, he said revenues
should then improve in the second quarter.
Analysts expect Lucent to post a 15 cent a share loss in its fiscal first
quarter, according to First Call.
Lower industry spending
Lucent said it expected overall industry spending to decline 15 per cent to 20
per cent in 2002, while its targeted larger customers' budgets would shrink 10
per cent or more. In late August, the company forecast that its larger
customers' spending would be flat amid an industry decline of 10 per cent.
Lucent expects industry spending in its first quarter of 2002 to be even
lower than current levels due to the increased uncertainty after the Sept. 11
hijacked airplane attacks and the spending patterns of its large North American
customers. It plans to halve its spending in fiscal 2002 to $750 million.
For the fiscal year, Lucent's net loss, including the charge and Agere,
totaled $16.2 billion, or a loss of $4.77 a diluted share, compared with a net
profit last year of $1.2 billion, or a profit of 37 cents a share. Sales fell 26
per cent to $21.3 billion.
As of Sept. 30, Lucent's cash balance was $2.4 billion and $1 billion was
outstanding against the $4 billion in available credit facilities. Lucent's
struggles have been reflected by the industry.
Nortel last week reported shrinking sales and a third-quarter net loss of
$3.5 billion, on top of the massive second-quarter loss of $19.4 billion. JDS
Uniphase in July posted a $50.6 billion annual loss, probably the largest in
North American corporate history.
Lucent said it still expects to close the $2.75 billion sale of its
fiber-optic cable unit to Furukawa Electric Co. Ltd. and Corning Inc. by the end
of 2001. It still plans to spin off the rest of its Agere stake. Lucent has
slashed its work force from 106,000 in January to 77,000 at the end of
September, and intends to reduce it to between 57,000 and 62,000 by the end of
March.
(C) Reuters Limited.