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THURSDAY JULY 23 1998ÿÿTelecomsÿ
LUCENT: Company lifted by technology boom
By Roger Taylor in San Francisco
Lucent Technologies, the world's largest maker of telephone equipment, more than doubled profits before charges in its third quarter. It was helped by international expansion and the rapid growth of integrated telephone networks capable of handling both voice calls and data.
Excluding $668m in one-off charges, net income rose to $435m, compared with $213m for the same period last year. Earnings per share were 32 cents, up from 17 cents and well ahead of Wall Street forecasts of 27 cents.
The better-than-expected results come after a sharp rise in Lucent's share price, which has increased more than six-fold since the company was spun out of AT&T two years ago. The business is now worth about $133bn - substantially more than its former parent. Lucent's shares rose « to 102 5/8 in early trading yesterday - against the market trend.
The rise has been driven by the boom in telephone technology, including the growth of mobile phones and, more recently, the explosive growth of the internet. This is creating demand from telephone companies for data networking equipment used to manage internet traffic, e-mail, video-on-demand and the wide range of new uses to which telephone lines are being put.
Lucent has also benefited from rapid international expansion. Currently, the company has only about 3 per cent of the market outside the US but is growing fast. International growth rates were twice those inside the US for most product areas. As a result, revenues grew 14 per cent to $7.2bn for the three months to June 30.
The $668m in one-off charges mainly relate to Lucent's recent acquisitions of businesses that specialise in data networking equipment. They left the company with a loss of $232m for the quarter, or 17 cents a share.
Lucent has identified the fast growing market for data networking equipment as central to future growth, but faces stiff opposition from the computer companies that originally developed the technology, such as Cisco Systems.
Bill O'Shea, head of Lucent's data networking division, said he believed the market potential was worth up to $50bn and that this would double by 2002.
Lucent has bought a string of companies over the last year, including Prominet, Livingstone Enterprises, Yurie Systems and Lannet, in order to build up its expertise in data networking, reflecting the need for telephone equipment companies to be able to offer these new technologies.>>>> |
