Lucent sees revenue falling 15 percent

MURRAY HILL, N.J., June 13 (UPI) -- Lucent Technologies Inc. said Thursday its expects third quarter revenue to decline by 10 percent to 15 percent, to $3.17 billion or $2.99 billion, on a sequential basis from the $3.52 billion recorded in the fiscal second quarter, due to continuing market softness.

The company's revenue estimate is below a Thomson Financial/First Call survey of Wall Street analysts of $3.52 billion. Previously, Lucent said it would not provide third-quarter revenue guidance due to market uncertainty.

"We remain focused on controlling those things we can control and our aggressive restructuring program continues to produce results as we identify ways to improve productivity and our operational effectiveness," said Lucent's Chief Executive Officer Patricia Russo.

Russo added that when the economy does turn around Lucent "will be well-positioned to profitably grow the business"

In last year's third quarter, Lucent reported a loss of $1.89 billion, or 55 cents a share, from continued operations, on revenue $5.82 billion. On an ongoing pro-forma basis and excluding items, the company lost 39 cents a share.

In its April earnings report, the company said, assuming no significant change in revenue levels, that it expected modest sequential improvement, on a pro forma basis, in its third quarter earnings.

Lucent said Thursday that due to its projected third quarter revenue levels, it now expects sequential earnings improvement from the pro forma loss of 20 cents a share in the second quarter.

The 20 cent per share loss includes a 6 cent a share tax charge. Lucent said sequential improvement over the 14-cents-a-share loss, excluding the tax charge, is possible for the fiscal third quarter, though it is "too early to call" citing current market conditions.

A First Call survey of analysts produced a third quarter estimate for a pro forma loss of 10 cents a share.

Lucent's pro forma results are defined as results from continuing operations, excluding business restructuring and one-time charges, amortization of goodwill and other acquired intangibles, the results of its optical fiber business and the one-time gain associated with the sale of the optical fiber business.

"Service providers continue to constrain their capital spending to conserve cash, which is clearly affecting our top line," said Russo, who noted that the company is seeing declines primarily in wireline systems in North America.

Lucent said it remains on track with its restructuring efforts and still expects to reach an employee base of about 50,000 by the end of its fiscal year Sept. 30.

In April, Lucent said it initially planned to cut its work force by 15,000 to 20,000, but had already eliminated 23,600 jobs as of March 31, bringing its total work force to 56,000, excluding Agere Systems Inc.

In early April, the telecommunications equipment maker unveiled plans to cut as many as 5,000 more jobs by the end of June. The cuts would bring its head count to just above 50,000, which is less than half the 106,000 workers it had in January 2001.

Lucent also plans to provide an update on its efforts to reduce its breakeven point, or the amount of revenue it must bring record to reach profitability, at its July 23 earnings announcement. The company noted that it continues to target a return to profitability and positive cash flow during fiscal 2003.

In April, Lucent said its break-even point will be lower than the $4.25 billion in revenue it had initially determined, due to market uncertainty. The company noted that it is working toward a break-even revenue figure that is "somewhat" below $4 billion.

Lucent said it has more than sufficient liquidity to fund its operations and business plans and has no outstanding balance on its credit facility. It amended certain financial covenants of its credit facility to provide "additional flexibility in an uncertain market," the company said.