CHICAGO – Telecommunications equipment giant Lucent Technologies Inc. on Tuesday posted a fiscal first-quarter operating loss amid a severe telecom spending slump, but said it anticipated growth in the second quarter.
The Murray Hill, New Jersey-based company reported an operating loss, after an income tax benefit and other items, of $757 million, or a loss of 23 cents a share, compared with a loss of $1.437 billion, or 42 cents a share, in the same period last year.
The first-quarter loss before those benefits was $1.28 billion compared with a loss of $2.1 billion last year.
Analysts had expected Lucent, the world's No. 1 maker of telecom gear, to lose 24 cents, with a range of losses of 23 cents to 26 cents, according to market research firm Thomson Financial/First Call.
Revenues from ongoing operations for the quarter fell to $3.47 billion from $3.8 billion last year. Its fourth-quarter revenues were $4.8 billion.
STILL PROBLEM CUSTOMERS
``They did quite well executing on their (restructuring) plan,'' said Dresdner Kleinwort Wasserstein analyst Ariane Mahler.
``Of course, I'm disappointed that there's still some problem customers, but hopefully that's it by now,'' she added, referring to an increase in provisions made by the company for bad debt and customer financing. Mahler said she planned to raise her second-quarter estimates on expectations things will improve going forward.
Lucent said last month that its first-quarter loss would be larger than Wall Street expected because of the prolonged spending slowdown. It said its loss from continuing operations would be between 23 cents and 26 cents on revenues ranging between $3.1 billion and $3.4 billion.
Lucent's net loss for the first quarter was $423 million, or 14 cents a diluted share, compared with a year-ago net loss of $464 million or 14 cents a diluted share. Last year's net loss included a loss from discontinued operations, the cumulative effect of accounting changes, and an extraordinary gain related to the sale of the power systems business.
The company said it expects second-quarter revenues to grow 10 percent to 15 percent from the first quarter, while its earnings will improve faster. The guidance means Lucent would post revenues of between $3.8 billion and $4 billion next quarter.
Lucent, spun off by telephone giant AT&T Corp. in 1996, said its break-even point will be cut to $4.25 billion in quarterly revenues from $4.75 billion by the end of the fiscal year in September.
Analysts were expecting the company to post a second-quarter loss of 17 cents a share on revenues of $3.42 billion, according to First Call.
Telecom suppliers, including Lucent rival Nortel Networks Corp. and networking giant Cisco Systems Inc., have been hit hard by the spending slowdown by its customers over the past year.
Lucent, which has reported net losses totaling $16.2 billion in the last four quarters, said last month it believed the first quarter would mark the low point of the market downturn for its revenues.
NORTEL SAID SPENDING STILL TIGHT
However, Nortel last week reported a steep slide in fourth-quarter sales and said the economic downturn was still weighing on customers' spending plans. The Canadian telecom equipment giant expects a 10 percent drop in first-quarter sales from the fourth quarter, compared with the flat results analysts had forecast.
Lucent also said on Tuesday it halved its vendor financing commitments since the end of Sept. 2001 to $2.5 billion from $5.3 billion.
However, Lucent said its selling, general and administrative expenses rose 1 percent from the previous quarter, to $1.1 billion because of an increase in provisions for bad debt and customer financing of $154 million to $451 million.
Excluding the provision, the selling, general and administrative expenses would have declined 18 percent from the previous quarter.
``Clearly, the progress we have made proves that we can execute and continues to put us on the path to profitability and positive cash flow in the current fiscal year,'' Chairman Henry Schacht said in a statement.
Lucent said it has reduced its work force to 62,000 at the end of last year from 106,000 last January when it launched its restructuring, as it cut 15,000 jobs from the end of the previous quarter.
The company's stock closed up 16 cents, or 2.45 percent, at $6.69 in Friday trading on the New York Stock Exchange trading.
Since last January, when the company launched its restructuring, Lucent's stock has fallen 50 percent, but slightly outperformed its peers in the Standard & Poor's Communications Equipment Index.