Lucent Technologies Inc. (LU) 59 1/4: Is this telecommunications equipment supplier on the mend or are more tough times ahead? This is the question that investors have been asking for the past twelve months after this premier telecommunications company started to give reasons why its performance may lack the stellar results it had previously delivered. While initially subtle, with CEO Richard McGinn making only cautionary statements, the slowdown in top line growth became more apparent as the year proceeded as Lucent began to deliver revenue growth below the company's target of 19% to 20% due to increased competition. By early this year, Lucent was making outright warnings about its performance, shocking investors in January by stating that it would post results about 30% below the then consensus numbers. Lucent went on to warn that Q2 numbers would also fall as much as 20% below street estimates. Hence, should we be surprised with today's report that Lucent earned $0.25 per share on a pro-forma basis, three cents better than the revised First Call estimate and year-ago profit of $0.19? Maybe. While the profit line growth was not as impressive as its top line where revenue in Q2 rose 16.8% to $10.26 billion, exceeding the year-to-year performance posted in Q1 when the top line rose by less than 1% to $9.9 billion, the bottom line is starting to improve. And Mr. McGinn said that "Lucent is regaining its momentum," guiding revenue growth estimates to the high-teens as growth in optical components and data networking systems are performing well, allowing for full-year fiscal 2000 revenue growth of about 17%. Mr. McGinn also noted that in Q2, "revenues for both wireless and service provider Internet infrastructure increased by more than 50 percent." While two-thirds of the year is yet to be accounted for, it seems that Lucent investors will have something to again smile about. Though companies are known for making statements that may color the outlook a bit more brightly than might be the case, Mr. McGinn has a history of being straight-forward and taking the blame (as he did back in January) when things are not going well. Thus, we tend to believe Mr. McGinn when he says that Lucent is ready to turn the corner. - RN
from briefing.com
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Good growth in wireless.
Jack |
