Lucent reorganises as profits rise

Lucent reorganises as profits rise

Lucent Technologies has reported a fourfold year-on-year increase in net income for the second quarter of its 2005 fiscal year, on revenue up 6 per cent, and announced a reorganisation of its network equipment business units.

The company reported net income of $US282 million for the quarter ended March 31, for earnings of $US0.06 per share. Net income was up 315 per cent on the $US68 million reported a year earlier.

Revenue totalled $US2.34 billion for the quarter, up 6 per cent from $US2.19 billion a year earlier.

Analysts had expected earnings of $0US.04 per share and revenue of $US2.31 billion, according to a poll conducted by Thomson First Call.

A tax refund contributed about $US0.02 per share of the earnings, the company said.

Looking ahead, the company expects its revenue to grow faster than the market, increasing by 4 per cent to 6 per cent over the full fiscal year.

"The greatest near-term opportunity is wireless," chairman and chief executive officer, Patricia Russo, said.

The market for fixed-line equipment remained challenging, she said, although she expected the decline in this sector to stop and revenue to stabilise at this quarter's level.

"We have shifted our investment away from legacy products," she said.

The company had cut its workforce by 800 employees since the start of the year, to 31,000 workers, chief financial officer, Frank D'Amelio, said.

Most of the 800 jobs cut were in the fixed-line business, which would lower expense levels in that sector, he said.

Despite declining revenue from legacy telecommunications products in the US. and from Personal Handyphone System (PHS) mobile phone systems in China, D'Amelio said he remained confident the company would achieve its target of midsingle-digit percentage growth in revenue this year.

To meet that target, the company is reorganising to address a decline in demand for its fixed-line networking equipment. Revenue at its Integrated Network Solutions (INS) business unit fell 18 per cent over the last year, to $US589 million. By merging INS with the Mobility Solutions business unit, where revenue rose 24 per cent to $US1.2 billion over the same period, Lucent hoped to cut costs and address a growing market for what it called blended lifestyle services, it said.

The INS unit will now report to Cindy Christy, who already heads Mobility Solutions.

The combined entity would be renamed the Network Solutions Group, the company said.

Janet Davidson, formerly head of INS, will take on the new role of head of corporate strategy and business development.

Lucent's services business will remain a separate unit. Revenue there rose 4 per cent over the year, to $US499 million.

The company announced one other personnel change: president of Bell Labs, Bill O'Shea, is retiring after 33 years with the company. He will be replaced by Jeong Kim, who is rejoining Lucent after almost four years' absence.

Kim was formerly chief executive officer of access networking equipment vendor Yurie Systems, acquired by Lucent for $US1 billion in May 1998. He worked for Lucent until October 2001, before leaving to work on other projects.

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