Lucent: Weak demand will lead to a revenue slide

Wed, 06/12/2002 - 8:00pm
Susan Rush

Lucent Technologies Inc. is warning third-quarter revenue is expected to slide as much as 15 percent compared to the second quarter. The telecom equipment giant blames weak demand for its equipment.

Lucent, which posted second-quarter revenue of $3.52 billion, said Q3 revenue will decline, on a sequential basis, between 10 percent and 15 percent. Analysts, on average, were expecting revenue to remain relatively flat at $3.517 billion for the quarter, according to polled by Thomson Financial/First Call. The company does expect to report sequential improvement over its Q2 pro forma loss of 20 cents a share.

"Service providers continue to constrain their capital spending to conserve cash," Lucent Chief Executive Patricia Russo said. Most of its declines are coming from wireline systems in North America, she said. The company is not providing top line guidance for fiscal Q3 "in light of market uncertainty."

Lucent is suffering from what many in the telecom industry are suffering from, a lack of clear visibility. "This is not a Lucent specific phenomenon," says Bruce Hyman, an telecom equipment analyst at Standard & Poor's. "Overall there is lack of visibility as to when the carriers are going to start buying — the situation is beyond Lucent's ability to forecast." On Tuesday, Nokia warned second-quarter sales would grow between 2 percent and 6 percent, down from a prior target of up to 7 percent. The No. 1 handset maker also blamed curbed demand for wireless phones and network equipment.

Lucent is continuing its march toward returning to profitability, and by the end of the fiscal year, the company expects to have roughly 50,000 employees.


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