Wednesday April 22, 11:16 pm Eastern Time
INTERVIEW - Lucent searches for more acquisitions
By Jessica Hall
NEW YORK, April 22 (Reuters) - Lucent Technologies Inc. (LU - news), which has
spent more than $3 billion on acquisitions over the past year, is still searching for
potential targets, Donald Peterson, its chief financial officer, said Wednesday.
Analysts and industry sources have speculated Lucent may make a major acquisition
later this year when it is freed from a two-year restriction against pooling-of-interest
combinations that would unravel its favorable tax-free spin-off from AT&T.
But Peterson said the company would not necessarily wait until the restriction ends on
October 1 before making another acquisition. He declined to name any specific targets
or sectors.
''We have not been in a strategy of waiting. We actively look at acquisitions and made
half a dozen in the last year ... and we'll continue to do that,'' Peterson said in an
interview after the company announced better-than-expected quarterly earnings.
''I would not see a gate up there that keeps us from doing anything that we think is
essential. These markets move too quickly to think you're going to sit out until you're
ready,'' he said.
Since its spin-off from AT&T in 1996, Lucent has acquired companies in areas such as
microelectronics, messaging and data networking.
''We'll continue to look in those areas and others. I wouldn't rule out any area of our
business for potential acquisitions if it made sense within our business strategy,'' he said.
Lucent is a leader in the telecommunications equipment market and is becoming an
increasingly powerful player in the data and Internet markets, analysts said.
Analysts said Lucent could use an acquisition to leap-frog into a leading position in the
data market or to extend its reach internationally. A wide range of companies, including
Cisco Systems Inc. (CSCO - news) and Finland's Nokia Ab (NOKSa.HE), have
been mentioned as potential targets.
Lucent's acquisition prospects -- as well as the company's solid fundamentals and rosy
long-term growth outlook -- have pushed its shares up more than 90 percent since the
beginning of the year.
''Lucent looks like the Mona Lisa,'' said Alfred Goldman, a technical analyst with A.G.
Edwards and Sons.
Goldman said Lucent's stock faces no major near-term resistance and momentum
appears positive.
The company's strong second-quarter results pushed the stock to a fresh high of
78-15/16 on Wednesday before it settled slightly to 76-13/16 by late afternoon.
In the second quarter ended March 31, Lucent's net income, excluding a one-time $157
million acquisition-related charge, rose to $180 million, or 14 cents a share, from $66
million, or 5 cents a share, in the year-ago quarter.
The results beat the consensus Wall Street forecast of 9 cents a share, according to the
First Call research service. The company has beaten expectations every quarter since its
1996 spin-off from AT&T.
Peterson said the company was comfortable with the current range of 1998 earnings
estimates of $1.50 to $1.61 a share.
''We continue to see substantial growth in our market. We're operating in a way we see
as taking share in that market. At the same time we've got control of our costs at the
margin level and the cost level,'' he said.
Gross margins for the second quarter improved to 44.2 percent from 42.1 percent in
the year-ago quarter, reflecting a more favorable mix of products and services as well as
improved management of costs.
Peterson said second-quarter gross margins were ''indicative'' of gross margins for the
year.
''I see a continuing good mix in our business, around the same kind of thing we've seen
in the first two quarters.... The margin for the year looks like it will be good by
comparison to some of our prior years,'' he said. |
