Lucent Says It Has Cut Expenses by 74% Since 2001
Friday May 9, 9:53 am ET
By Tom Becker, Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Lucent Technologies Inc. has cut its operating expenses by 74% and increased its gross margins by 16% since initiating a restructuring program in 2001.
Lucent's chief financial officer said the restructuring is playing a critical role in the company's attempt to reach profitability by the end of its fiscal year. Speaking at an analyst conference Friday, Frank A. D'Amelio reaffirmed the company's goal to return to profitability by the end of the fiscal year. D'Amelio said the company's breakeven level remains at $2.4 billion, down from a breakeven of $5 billion in 2001.
Lucent has cut costs by evaluating and streamlining operations, eliminating certain manufacturing facilities, altering its product portfolio and associated research and development costs, and eliminating non-strategic product lines. The telecommunications equipment-maker has also reduced its workforce 64% to 38,500 from 106,000. Lucent will layoff an additional 3,500 employees by the end of the year, D'Amelio said.
"We believe the restructuring moves have significantly reduced or improved our overall cost structure," D'Amelio said. "There's been a lot of redesign and it is helping us achieve our goals."
Under the two-year restructuring program, Lucent has seen operating expenses fall 74% to $700 million from $2.9 billion, debt decrease 31% to $5.6 billion from $8.1 billion, and gross margins increase to 31.7% from 15.7%, D'Amelio said. Lucent has forecast gross margins of 35% by the end of its fiscal year.
Lucent has also reduced its financing commitments to $600 million from $7.5 billion.
At the same time, the company's revenue declined 45% to $2.4 billion from $4.3 billion. D'Amelio reaffirmed that Lucent expects its revenue to fall 20% to 25% for the year. He said the company should have $2.5 billion in cash by Sept. 30, the end of the fiscal year.
D'Amelio said that, if necessary, there are other ways Lucent can continue to cut costs. He didn't elaborate.
The Lucent executive said he expects the industry to remain very competitive but doesn't see any major shift in market share.
The conference call come just weeks after Lucent reported a net loss of $553 million or 14 cents a share for its fiscal second quarter.
By Tom Becker, Dow Jones Newswires; 201-938-2020 |
