Lucent losses illustrate industry woes

23 Jul 2003

The ongoing drought in the tech sector was signalled this afternoon by the fact that Lucent Technologies posted its 13th consecutive quarterly loss, as spending by telecoms companies and businesses remains tight.

The company recorded revenues of US$1.96bn in the third quarter, which represents an 18pc decline on the US$2.4bn revenues achieved in the previous quarter. A year earlier, Lucent recorded revenues of US$2.95bn.

However, despite the declining sales, the results indicated that Lucent has managed to stem serious losses through restructuring, mass layoffs and other measures. Lucent’s net loss for the quarter was US$254m, compared with a loss of US$351m in the previous quarter. A year ago, the company recorded a net loss of US$8bn.

“Despite our decline in mobility revenues this quarter, we were able to continue our progress on the bottom line,” said Lucent Technologies chairman and CEO Patricia Russo. “We also saw some positive indicators in new revenue opportunity areas, highlighted by services contracts with Telecom New Zealand and the U.S. Army, as well as new business partnerships with other technology leaders like Juniper Networks. We will balance our investment in new revenue opportunities with the need to reduce our breakeven further, and we now expect our return to profitability to occur in fiscal 2004.”

Despite declining sales revenues, restructuring efforts appear to be paying off and the company saw an increase of approximately US$1.5bn (raised through a public offering of senior debt) on its balance sheet resulting in the company having US$4.9bn in cash.

Analysts have reacted favourably to the fact that Lucent has a healthy balance sheet, but have warned that Lucent needs to resolve its problems in terms of sales, the one area that is hurting the company most.

Last month Lucent revealed plans to lay off 120 workers at its network operating systems division at Cherrywood in Dublin, where it currently employs 350 people.

By John Kennedy