Lucent Reports Plunge in Second-Quarter Results

MURRAY HILL, N.J. – Struggling telecommunications equipment giant Lucent Technologies Inc. said Tuesday its second-quarter results plunged as the slowdown in customer spending combined with its restructuring to drag down results.

The company, based in Murray Hill, N.J., reported an operating loss of $3.7 billion, or $1.08 per diluted share, excluding the Agere unit that was recently partly spun off, compared with net income of $755 million, or 23 cents a share, in the same period last year.

This year's results included $2.7 billion in business restructuring and one-time charges, as well as amortization of goodwill and other acquired intangibles and a loss from discontinued operations.

Lucent's stock closed Monday down 3 percent, or 31 cents, at $9.20 on the New York Stock Exchange. Over the past year, it has underperformed the Standard & Poor's 500 Index by more than 80 percent. In premarket trading, Lucent rose to $9.30.

The $2.7 billion in restructuring and other one-time charges was wider than the $1.2 billion to $1.6 billion projected in January when Lucent announced its seven-point restructuring plan. Lucent said other charges may still be taken.

Excluding the various charges and costs, the pro forma loss was 37 cents a share, compared to a gain of 16 cents in the year-ago period, the company said. On a sequential basis, results improved slightly from a pro forma loss of 39 cents in the first quarter.

The company said in January its financial results would improve each quarter through the year.

``As we've said, fiscal year 2001 is a transition and rebuilding year for Lucent,'' Lucent Chairman and CEO Henry Schacht said in a statement.

``Despite market conditions, we expect modest sequential improvement on the top line and, as we've said previously, we expect greater sequential improvement on the bottom line from the 37 cents pro forma loss per share we reported this quarter, as we feel the full impact of the business restructuring program in the third and fourth fiscal quarters of 2001,'' he added.

Lucent said losses relating to its Winstar Communications loans and the writedowns of certain equity investments totaled 15 cents a share. It said it has fully reserved for its loans to Winstar, which recently filed for bankruptcy protection and filed a $10 billion lawsuit against Lucent.

Analysts on average had expected a loss of 23 cents a share with a range of a loss of 12 cents to a loss of 47 cents, but that estimate included results at Agere, according to Thomson Financial/First Call, which tracks estimates. Lucent expects to complete the Agere spinoff by the end of September.

Revenues from continuing operations for the quarter ended March 31 fell 18 percent to $5.9 billion from $7.2 billion. Excluding the various costs, pro forma revenues fell 17 percent to $5.9 billion.

On a sequential basis, Lucent's pro forma revenues rose 36 percent from the first quarter.

The company reported a net loss from discontinued operations at Agere in the second quarter of $308 million.

Lucent said it made 2,000 of the 10,000 job cuts it had announced in January and eliminated 2,200 of the 6,000 contractor jobs it had targeted.

The company also said it cut debt maturing within one year to $2.31 billion at the end of March from $5.01 billion at the end of last year.

Lucent said it reduced its receivables by $700 million, and its operating expenses by $75 million, or $300 million on an annual basis. The company said it is on target to hit its goal of $2 billion in annualized savings, excluding further reserves for its vendor financing deals.

Lucent said it cut its capital spending $100 million more than originally planned and is on track to cut fiscal 2001 capital spending budget by $400 million from previously planned levels.

The beleaguered company -- laden with debt and shrinking market share -- is not alone, however, as demand in the telecom equipment sector has slowed, analysts said.

Nortel Networks, the largest telecom gear maker, last week reported first-quarter losses in line with an earlier warning, but said earnings could improve next quarter as it cuts 5,000 more jobs and trims costs.

In January, Lucent reported a $1 billion first-quarter operating loss, and launched the restructuring that included job cuts totaling 16,000, or 15 percent of its work force.

Since then, the company has partly spun off Agere, which helped it pay down its commercial-paper debt; negotiated $4.5 billion in new credit lines; and announced plans to possibly sell its fiber-cable unit, which analysts said could generate $4 billion to $8 billion. Lucent recently called rumors it would file for bankruptcy ``absolutely false.''