Lucent responds on WorldCom.
``They are a minor customer, and we have minimal exposure,'' Lucent spokeswoman Mary Lou Ambrus said of WorldCom, which isn't among Lucent's 20 biggest customers.
quote.bloomberg.com
Lucent, Rivals Fall on WorldCom's Botched Bookkeeping (Update3)
By Justin Baer
New York, June 26 (Bloomberg) -- Shares of Lucent Technologies Inc., Nortel Networks Corp. and rival communications-equipment makers fell after WorldCom Inc. said it will cut capital spending more than the company had planned.
The stocks also were hurt because France's Alcatel SA, another supplier, said it will report a loss this year. Lucent, the biggest U.S. equipment maker, fell 39 cents, or 20 percent, to $1.58. Nortel dropped 14 cents, or 8.7 percent, to $1.47. Juniper Networks Inc. slid $1.16, or 18 percent, to $5.13.
Less spending by WorldCom, the second-biggest U.S. long- distance phone company, is the latest blow to an equipment industry battered by falling demand for gear such as switches and routers. Investors said a recovery may be delayed longer if WorldCom files for bankruptcy. The carrier then may slash prices for its services, pressuring rivals to forgo profits to match the cuts.
``You're taking more capital spending out of the industry,'' said Ryan Tansey, a analyst with the John Hancock Technology Fund, which owns Lucent shares. ``The big fear with WorldCom is, if they emerge from Chapter 11, there will be a lot of pressure on pricing'' for services.
WorldCom, based in Clinton, Mississippi, said in a statement yesterday without elaborating that it is ``cutting significantly'' the 2002 capital-spending budget and plans to spend $2.1 billion next year. In April, the company pared the 2002 budget to about $4.90 billion from $7.89 billion last year, and Chief Executive John Sidgmore said this month that it may trim $1 billion more.
Profit Threatened
Sharp price cuts will make it harder for big phone companies to be profitable, Tansey said. Carriers won't spend more money on equipment until their results improve, he said. AT&T Corp. is the biggest U.S. long-distance phone company.
WorldCom said yesterday it had misreported $3.9 billion in costs to hide losses for more than a year. The U.S. Justice Department opened a criminal investigation, according to a person familiar with the matter, and the Securities and Exchange Commission already had an accounting inquiry under way.
Alcatel, a rival to Lucent and Nortel, said today it would eliminate 10,000 jobs as customers spend less.
Sales to WorldCom accounted for 14 percent, or about $124 million, of Juniper's $887 million in 2001 sales. WorldCom comprised more than 10 percent of Juniper's first-quarter sales.
``They are a minor customer, and we have minimal exposure,'' Lucent spokeswoman Mary Lou Ambrus said of WorldCom, which isn't among Lucent's 20 biggest customers.
Nortel spokesman David Chamberlin said the company had ``no material exposure to WorldCom, who is primarily an optical customer.'' Sales of Nortel's fiber-optic equipment tumbled 71 percent in 2001 to $2.28 billion from a year earlier.
Shares of Corning Inc., the biggest supplier of optical fiber for networks, fell 56 cents, or 15 percent, to $3.23. Agere Systems Inc., which sells chips and optical components to equipment makers such as Lucent, fell 42 cents, or 22 percent, to $1.50 |
