Shareholder's meeting rd.yahoo.com*http://public.wsj.com/sn/y/SB982775572278991505.html
February 21, 2001
Lucent CEO Faces Shareholders,
Says Orders Are 'Holding Up'
By Dennis Berman
Staff Reporter of The Wall Street Journal
Lucent Technologies Inc. CEO Henry B. Schacht said the company's second fiscal-quarter orders are "holding up," even amid a buying slowdown that's rocking the entire telecommunications sector.
In a news conference following the company's annual meeting in Orlando, Fla., Mr. Schacht said he expects "better sales this quarter than last quarter," though that's not saying much. Last quarter, Lucent reported a loss of $1.02 billion, amid a 26% revenue decline. "Maybe we saw it before everyone else did," added Mr. Schacht, referring to the spending decreases.
Mr. Schacht also shed light on the company's vendor-financing plans, which have been a trouble spot for Lucent and the entire industry, after a bevy of new telecom carriers have run into financial difficulties. In its previous form, Mr. Schacht said, the company's 11 divisions could each separately grant financing to their customers. Since the company has been reorganized into two main sales and product units, financing authority is now centralized in the chief financial officer's suite, with each decision scrutinized by a new team of credit analysts.
"We are not a bank," Mr. Schacht said. "We are adding new vendor financing at a much lower rate and in a very judicious way."
After a year of tumult inside the Murray Hill, N.J. equipment maker, Mr. Schacht presented a humble face to some 600 shareholders gathered at an Orlando convention center.
"We have to talk less and perform better," Mr. Schacht said.
Shareholders, many of them retired AT&T Corp. and Lucent employees, were eager to criticize the beleaguered company's performance, which has lost significant ground to rival Nortel Networks Corp. and a handful of smaller companies. "Mickey Mouse and Goofy could have done as good a job at running this company," said Chicago shareholder Martin Glotzer, referring to nearby Disney World.
Mr. Schacht did his best to convince shareholders otherwise, hammering on the company's $1.6 billion restructuring plan. The CEO hinted at more asset sales or spin-offs, saying that the company's board is undertaking a full portfolio review and is "looking at several other issues." He also said the firm is expected to complete negotiations for $6.5 billion in bank lines of credit by today at the latest. He added that employee attrition rates have slowed over the last two months, in his opinion because workers view the company's new management as "getting it."
Mr. Schacht addressed the company's new revenue recognition practices, which were the source of a $679 million restatement last quarter, and are now the focus of a Securities and Exchange Commission fraud probe. He noted that the company is getting back "to more normal selling practices," and has installed new controls for granting customers future credits on equipment sales.
Shareholders remained testy, however, calling for greater accountability from management and the company's board of directors, who were seated in the front rows of the auditorium, and were not available for audience questions. Deborah Hopkins, the company's Chief Financial Officer, was not in Orlando, Mr. Schacht said, because she was completing the finance deal in New York.
Mr. Schacht asked for patience from shareholders, explaining that the effects of the company's restructuring and $2 billion cost-cutting plan would not be felt until the fourth quarter. Further, he would not provide any financial guidance on revenues or a return to profitability, only to say that Lucent would register sequential quarterly improvements going forward. "We're very careful with the Wall Street community not to overstate," Mr. Schacht said. "We developed a reputation of calling out quarters we were not able to meet."
He was clear about the profitability of one particular deal, however. In response to an audience question, Mr. Schacht said Lucent is currently reviewing a bid for a $45 million New Jersey golf course and training center controlled by the company. "We will make a profit on it and be glad to have it behind us," Mr. Schacht said.
Write to Dennis Berman at dennis.berman@wsj.com |
