Lucent Delivers The Goods
By Monica Alleven
For all those service providers wondering where your precious monies are going, look no further.
Lucent for the first time topped the $10 billion revenue mark last quarter. A big share of that was from hot growth areas such as
wireless, optical, data networking and microelectronics. It was the vendor's best quarter yet, capping off a fiscal year of
colossal growth.
Even the July departure of executive dynamo Carly Fiorina didn't faze the former AT&T Corp. equipment maker, which last
week unveiled a realignment that essentially negates the need for a direct Fiorina replacement. Internationally, "we're now hitting
our stride ... and are going to continue to grow the business both in the U.S. and outside faster than the market," Lucent
Chairman and CEO Richard McGinn told analysts last week.
What a stride. If not for one-time events such as acquisition costs, Lucent in the fourth quarter would have earned $972 million,
or 31 cents a share--a 50 percent gain from the year-ago quarter. For the entire fiscal year, revenue totaled $38.3 billion, and
Lucent expects next fiscal year's revenue will grow by 17 percent to 20 percent.
But it's not all peachy. Sales in Lucent's Enterprise division, which sells communications systems to businesses, have been flat,
while sales were up in all other areas. McGinn says he won't stand for that; either the Enterprise's underperforming Systimax
cabling systems business shapes up by mid-2000, or it will find itself in a "different disposition."
Short-term, analysts are concerned software revenue may go down at the end of this calendar year as service providers deal
with Y2K issues, although Lucent executives downplay any potential Y2K effects, saying the glitch-free 9/9/99 situation and
Federal Reserve Chairman Alan Greenspan's positive Y2K comments should quell worries.
Lucent won't say what percentage of its revenue comes from wireless specifically, but analysts estimate wireless accounts for
about 20 percent of the vendor's business. Battling No. 1 GSM supplier Ericsson for market share, Lucent has become a
leader in CDMA and landed some important TDMA contracts as well.
Overall, Lucent intends to keep the momentum going, and growth was the driver behind the realignment. Lucent is forming four
core divisions to mirror the way the company approaches its customers with converged network solutions. Previously under the
Global Service Provider division that Fiorina led, wireless networking now falls under the Service Provider Networks domain,
headed by Patricia Russo. Russo, who, like Fiorina, made last year's Fortune Magazine's list of 50 most powerful women in
business, previously oversaw strategy, business development and corporate operations at Lucent.
Wireless will remain an important growth business for Lucent as service providers scramble to build new networks and upgrade
systems that don't have enough capacity. And Lucent is landing more international contracts--so U.S.-based service providers
can rest assured at least some of those billions of dollars in Lucent revenue is coming from someone else's pockets. |
