Lucent continues quarterly profit streak

Lucent continues quarterly profit streak


Lucent Technologies reported strong year-over-year revenue and income growth for its fiscal third-quarter on Wednesday, saying it benefitted from increased demand for VoIP (voice over Internet Protocol) and high-speed data and broadband access. The company also predicted that it would report a full year of profitability for 2004 when it releases the results in October, citing a market stabilization.

The telecommunications equipment and services company reported revenue of US$2.19 (AU$3.07) billion, an increase of 11 percent from the US$1.96 (AU$2.75) billion reported a year ago. Revenue for the quarter ended June 30 was essentially flat from the US$2.19 (AU$3.07) billion earned in the previous quarter.

Net income came in at US$387 (AU$387) million, or US$0.08 (AU$0.08) per diluted share, compared to a net loss of US$254 (AU$356.2) million, or US$0.07 (AU$0.1) a share, during the year-ago period. It was the company's fourth consecutive quarterly profit.

Analysts polled by Thomson First Call predicted earnings of US$0.02 (AU$0.03) a share on revenue of US$2.2 (AU$3.1) billion for Lucent's third-quarter.

The company also made solid gains when compared to the company's second quarter income of US$68 (AU$95.43) million, or US$0.02 (AU$0.02). However, Lucent said that third-quarter earnings per share results benefitted from certain items, such as bad debt and financing recoveries, which boosted the company's earnings by US$0.04 (AU$0.06) a share.

The company saw progress in areas like VoIP, high-speed data and 3G (third-generation) wireless access, Lucent Chairman and Chief Executive Officer (CEO) Patricia Russo said in a statement on the results. Additionally, the company sewed up 35 customer wins during the quarter and tapped into new international markets, Russo said.

"We are seeing more significant, multiyear plans being developed for next-generation networks," Russo said during a conference call with press and analysts Wednesday.

Russo cited new customers for its Accelerate VoIP portfolio, for example, including a three-year agreement with BellSouth, and a deal with KPY Networks in Finland, both won during the quarter.

To help further strengthen its position in the area, the company also announced in its third quarter that it was buying IP-gateway product provider Telica, which is set to close in the company's fiscal fourth-quarter.

Continued global expansion was also listed as contributing to the strong quarter. The company reported that revenue from outside the U.S increased 3 percent over last year to US$785 (AU$1,102) million, while revenue from the U.S. increased 17 percent to US$1.4 (AU$1.97) billion. Russo highlighted mobile technology deals won in Vietnam and Pakistan during the quarter, saying that they were firsts.

Mobile technology continues to be a strong business sector for the company, as its Mobility Solutions group reported a 58 percent increase in revenue over last year, to US$986 (AU$1,384) million.

"We've seen good strength in the mobility market as customers grow their networks to serve more subscribers and build out 3G services," Russo said. Lucent announced 3G network deployments with a handful of customers during the quarter, including China United Telecommunications and U.S. Cellular.

And last week Lucent announced a US$5 (AU$7) billion deal with Verizon Wireless to provide networking equipment, software and services, which underscores the company's progress in the 3G wireless business, Russo said.

The CEO emphasized that Lucent is investing in both fixed and wireless offerings, however, in expectation of an increasingly converged market.

"We are clearly seeing an interest in converged services, regardless of the access," Russo said.

While the company is investing in several areas, it reported that as of June 30, it held US$4.7 (AU$6.6) billion in cash and marketable securities, and a slightly-reduced headcount of 32,300.

The company predicted that it would post an annual revenue percent increase for fiscal 2004 in the mid-single digits.

Thomson First Call analysts predict that the company will report a revenue increase of 5 percent for 2004, to US$8.9 (AU$12.49) billion. In the fourth quarter, it is expected report sales of US$2.28 (AU$3.2) billion, or US$0.02 (AU$0.03) per share.

Lucent isn't the only telecommunications player predicting a market bounce-back. Telefonaktiebolaget LM Ericsson also reported strong quarter results on Wednesday, posting an 18 percent increase in sales for its second quarter as carriers moved to upgrade their networks. Both equipment providers are predicting that service-hungry consumers will continue to drive their businesses.

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