LU Warning CC March 12,2002
Earning call in April, still 3 weeks in Q to go
confirming Q-Q pro forma improvement
see 1 time charge due to new tax law signed last week
see improved GM
seeing delayed or reduced cap ex in last 3 weeks
now guiding to modest to 10 percent rev growth as opposed to 10 to 15 per
rev miss is due to delays in spending now competitve losses
still expect top line improvement
announced multi-year 400 mil contracts in Europe at CEBit
miss is more of a timing issue
will be Q3 before Agere spin out
don`t expect profitability till 2003 now
long term LU is still in a large market, 200 bill will get spent this ear by carriers despite cap ex cut
have sufficient cash for business plan now, will try to reasie capital as markets allow though
no draw down on credit facility
Rev are light due to weakness in INS wireline products, affecting top line growth, no shift in product buys, slow down in cap ex seen in last 3 weeks, corresponds to recent carrier announcements
seeing solid growth in wireless
still expect improved GM, 20 percent or great is achievable due to reduced cost and fewer one time charges
tareting 35 per GM long term
new tax law always operating loss to be carried back 5 years instead of 2
expect Q2 6 cent charge as a result
Q) 2 weeks ago LU was guiding to 10 to 15 per growth, waht is different todayÉ
A) In last few weeks LU has seen a significant change in the spending plans of carriers. Funnel order tracking system seeing more delays and more constrainted spending. Asa result LU did not see the high end of rev guidance being met. Now guiding to modest to 10 per growth. Seeing a tighter hold on spending as carrier focus on the bottom line. Result correspond to carrier announcements.
Q) Tax law details?
A)Still working on details. Expect benefit to exceed 6 cent charge significantly.
Q)Business mix? No change in mobility. So did INS wireless dip Q-Q? Geography ofdip in orders? All inUS?
A) Comment on Q-Q growth was overall. No segment guidance. Mobility is seeing solid growth. General tightening in INS segment. Still 3 weeks to go so mix could change/
Q) Biggest change due to INS business in US then?
A) Yes
Q) Softness in the last few weeksm but cpa ex cuts announced have be modest, why the miss by LU?
A) seeing systematic slow down in cap ex across industry. FOr lU only seeing effects the last few weeks. Overall effect in absolute dollar term is small.
Q) Wasthe 10 to 15 rev growth guidance justifed then given that March is usually a down Q?
A) Yes, absolutely. Note that rev miss is low in aboslute dollar terms.
Q)Op Ex improvement Q-Q still expected?
A) Op Ex down 3.6 bill so far or 900 mil per Q. Expect improved Op Ex.
Q) Saw optical wins, Was there strength in metro then, any other areas of strength?
A) No details yet. New product developments are on schedule.
Q)Slow down was in N. Amer then? Color by segment?
A) Nothing specific within wireline segment yet.
Q)Wireless growth. Only in US? What about Latin Amer. China Europe?
A: Within and outside US. No details yet.
Q) Impact of convertible on credit facility?
A) None. Last Q in compliance with credit facility. Expect to remain so.
Q) 400 mil contract will in Europe. Break down by carrier and segment?
A) Carriers: France Telecom, BTT, Hughes, KPN, ....
Prodcuts: Metropolis, Eon, GC550, Stinger,
No details on dollar amounts
Closing comments: stil expect rev growth, Agere spin off in Q3, 2003 before profitable,still expect GM > 20 per. , see bottom line growth better than top line growth |
