The Telegraph
Since 1st March, 1999
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Lucent suffers loss, sees sales gains

New York, Jan. 23: Lucent Technologies, the maker of telecommunications equipment, said Wednesday that it expected sales to climb this quarter even after it reported its 11th consecutive quarterly loss because of continued sluggish demand from phone companies.

The company’s loss in the quarter that ended December 31 narrowed to $ 264 million, or 11 cents a share, from $ 423 million, or 14 cents a share, in the period a year earlier. Lucent’s sales plunged 42 per cent, to $ 2.08 billion, from $ 3.58 billion the previous year, as large phone companies spent less on equipment.

Compared with the quarter a year earlier, Lucent said domestic and international sales each declined 42 per cent. Still, in an important indication of its prospects for 2003, Lucent said it won 20 new contracts in the quarter from companies, including the teleservices unit of the Tata Group and the Infocom unit of the Reliance group.

, both of India, and the KT Corp., formerly known as Korea Telecom.

“The market remains challenging and uncertain but we may be moving closer to stability,” said the chief executive, Patricia F. Russo.

Senior executives said that they were confident that Lucent can return to profitability by the end of the year, an achievement that hinges on a recovery of sales. Despite three years of declining revenue, Lucent said Wednesday that it expected sales this quarter to increase about 20 per cent, to $ 2.5 billion, from the previous quarter.

Several analysts were skeptical about the forecast given the lack of details from telephone companies about their spending plans this year.

“It would be very difficult to achieve that figure given the market that currently exists for Lucent’s equipment,” said Jerald Murphy, an analyst for the Meta Group, a research firm that advises companies on purchases of technology equipment. “It is hard to see where that kind of growth will come from.”

Instead, analysts said Lucent may be trying to paint a rosy sales picture in case it decides to raise cash through the sale of debt or stock.

The chief financial officer, Frank A. D’Amelio, said Wednesday that Lucent had filed papers with the Securities and Exchange Commission that would allow it to issue as much as $ 1.75 billion of debt or equity. A previous filing would have allowed Lucent to issue only debt in the same amount.

“The filing was designed to give us flexibility,” a Lucent spokeswoman, Kathleen M. Fitzgerald, said. “We have no current plans to go to the capital markets.”

Lucent’s cash dwindled by about $ 700 million in the last quarter, to $ 3.7 billion, and the company indicated that despite layoffs and other cost cutting, it expected its cash to decline to about $ 2.1 billion by September 30, the end of its fiscal year.

Still, some analysts suggested Lucent may be turning a corner if sales growth materialises this quarter. Matt Zolin, a debt analyst at Lehman Brothers, pointed to Lucent’s modest increase in sales of wireless equipment in the last quarter and to expectations that wireless sales will recover.

“The new international and wireless contracts are an important illustration of how Lucent is still in the game,” Zolin said.

Lucent’s share price climbed almost 8 per cent Wednesday, to $ 1.81, the latest advance in a rally after reaching a low of 55 cents in October. It is still far from its high of $ 64.69 in December 1999. Barring further warnings of sales erosion, analysts said the stock’s recovery may continue if Lucent’s revenue increases this quarter.

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