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The Street unmoved by Lucent's planned cuts

Thu, 10/10/2002 - 8:00pm
Susan Rush

A layoff announcement made by telecom equipment giant Lucent Technologies Inc. failed to stir up panic on Wall Street today. The Nasdaq was up 35 points in mid-day trading action.

Today's announcement will result in 10,000 more Lucent workers getting their walking papers by the end of fiscal 2003. Once complete, Lucent will have a work force of 35,000, at its peak, Lucent had more than 100,000 employees.

The company expects to post a wider-than-expected fourth-quarter loss of as much as 65 cents a share. In an earlier forecast, the company was calling for a loss of 45 cents a share. A restructuring charge of $1 billion will be recorded in the fourth quarter. A $3 billion charge due to the decline in pension assets also will be booked in the fourth quarter.

In line with a previous guidance, Lucent is predicting a 20 percent to 25 percent sequential decline from the $2.95 billion in revenue posted in the third quarter.

To avoid default, Lucent also canceled a $1.5 billion credit facility and a $500 million facility. Lucent is in discussions with its bankers to establish a new, smaller credit facility, according to CFO Frank D'Amelio. The company lowered its breakeven revenue level to $2.5 billion.

As of 12:06 p.m. EDT, Lucent shares were up a penny to 71 cents.

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