P,
Is this why we've been going down? One of our blue chip customers, Lucent, is having a tough quarter. Don't know if the problem actually directly affects Jabil or not, but, as Rich says, superficial perceptions right or wrong and jittery nerves are driving tech stocks right now, as people are trying to be the first to squeeze through the exit door to protect huge profits. Having some cash right now is a good idea, I think. Bargains to come, but more downside first.
Lucent Sees Results Below Estimates
By Jessica Hall
NEW YORK (Reuters) - Lucent Technologies Inc. (NYSE:LU - news), the world's largest telecommunications
equipment maker, on Thursday said it expects its first quarter profits to fall below Wall Street's expectations on flat
revenue growth due to changes in customer purchasing habits, manufacturing constraints and lower-than-expected
gross margins.
Lucent's first quarter shortfall marks a shift from its once unbroken streak of posting better-than-expected profits.
While Lucent had a revenue shortfall a year ago, it still had exceeded Wall Street's profit forecasts every quarter since
it was spun off from AT&T Corp. (NYSE:T - news) in 1996.
Murray Hill, N.J.-based Lucent said it expects earnings for the quarter ended Dec. 31 to be in the range of 36 cents to
39 cents a share, compared with 48 cents a share a year ago. Wall Street had expected Lucent to earn 54 cents a share
in the first quarter, according to research firm First Call/Thomson Financial.
Lucent expects its first quarter revenues to be in the range of $9.8 billion to $9.9 billion, which is flat compared to the
year-ago quarter and below many analysts' expectations.
``We are clearly disappointed with the results for the quarter,' Lucent Chairman Richard McGinn said in a statement.
Shares of Lucent, the most widely held U.S. stock, fell 9-1/16 to 60 in after-hours trading, according to traders. Before
the announcement, Lucent's stock closed at 69-1/16, down 3-9/16 on the New York Stock Exchange.
``This is what we were afraid of -- that they were pushing to grow too hard, quarters were getting back-end loaded, the
risks were going up and they were stretching,' said Lehman Brothers analyst Steve Levy. ``I think McGinn is going to
have a big credibility gap.'
Levy had been neutral on Lucent during most of last year before raising them to ``buy' from ``neutral' in November.
Levy had raised his price target to $95 a share on Thursday morning.
Lucent is one of a few high-profile companies recently to warn of lower-than-expected results, including personal
computer company Gateway Inc. (NYSE:GTW - news) and software maker BMC Software Inc.
(NasdaqNM:BMCS - news)
Lucent cited several factors for the expected first quarter shortfall, such as lower software revenues due to the fact that
many customers now spread their purchases out throughout the year instead of loading up in the December quarter.
The company also said a faster-than-anticipated shift by customers to high-capacity fiber optic systems led to
near-term manufacturing capacity and deployment constraints. Lucent expects those problems will be fixed by the end
of the second quarter.
Customer delays in deploying equipment also contributed to Lucent's expected shortfall. The company expects the
equipment installations that were delayed will occur during this fiscal year.
Lucent also said it would have lower-than-expected first quarter gross margins due to the costs of introducing new
products and the lower software revenues.
For the second fiscal quarter, Lucent expects its revenues to grow 12 percent to 15 percent over last year's $8.78
billion revenue, while profits should grow 25 percent to 35 percent over the year-ago results of 17 cents a share. Wall
Street expects the company to earn 26 cents a share in the second quarter, according to First Call/Thomson Financial.
Lucent expects its strongest growth to be in the second half of fiscal 2000 as its optical, network access and
semiconductor products ramp up for full volume and customer use.
For the full year, Lucent expects its revenues to grow at the low end of the 17 percent to 19 percent range it previously
forecast. Meanwhile, full-year profits will grow 20 percent to 25 percent over last year's earnings of $1.20 a share.
Lucent's stock is expected to trade lower on Friday, but some analysts said the rest of the equipment industry may not
be as hard hit since many of the problems Lucent cited were company-specific.
The overall equipment industry continues to strong growth as telephone companies, Internet service providers and
corporations upgrade their communications networks to handle increasing amounts of data and Internet traffic.
``I think it will be a minor hit to (the overall equipment) market. There's nothing in here that is condemning for the
entire industry. It's basically implementation issues for Lucent,' Levy said.
Other analysts said rivals such as Nortel Networks Coro. (Toronto:NT.TO - news) and Cisco Systems Inc.
(NasdaqNM:CSCO - news) may use Lucent's shortfall to highlight their own strengths. Still, shares of Cisco and
Nortel fell in after-hours trading as investors were spooked by Lucent's announcement, analysts said. |
