Lucent profits beat estimates,
revenues fall short
Reuters, 01/21/99
NEW YORK - Lucent
Technologies Inc. , the world's
largest telecommunications
equipment maker, on Thursday
reported lackluster first quarter revenues but
better-than-expected profits.
Lucent, which last week agreed to buy data networking
company Ascend Communications Inc. in an $18.5 billion
deal, also outlined optimistic growth targets for the current
fiscal year. It expects earnings per share to increase about
35 percent on revenue growth of 19 to 20 percent, slightly
better than Wall Street had expected.
The company said its profits in the fiscal first quarter, ended
in December, were boosted by strong demand for data
networking equipment and improved foreign sales.
Lucent's profits totaled $2.7 billion, or $2 a share, including
a $1.3 billion gain due to changes in accounting for its
pension and post-retirement benefits, and an
acquisition-related charge of $14 million.
A year earlier, it had a profit of $792 million, or 61 cents a
share, including an acquisition-related charge and a gain on
the sale of a unit.
Excluding special gains and charges, profit rose 26 percent
to a record $1.414 billion, or $1.05 a share, in the first
quarter.
The results beat Wall Street earnings expectations of $1.01
a share, according to First Call, which tracks analysts'
estimates.
Lucent, based in Murray Hill, N.J., has topped earnings
expectations every quarter since it was spun off from AT&T
Corp. in 1996.
Despite the strong first quarter profits, shares of Lucent fell
$6.31, or more than 5 percent, to $108.75 in heavy trading
on the New York Stock Exchange.
Analysts said investors were disappointed by the
company's slow revenue growth.
Lucent's first quarter revenues grew only 6 percent, to $9.2
billion from $8.7 billion a year earlier. The company said
some revenue it had expected to record at the end of the
first quarter would instead be delayed into the second
quarter.
Analysts said Lucent's revenues were about $800 million
below expectations.
''There was a little unexpected delay in revenues from
contracts, so the quarter doesn't look as good ... Lucent up
to now has been so good at hitting its targets, so this will
cause some people to get a little concerned,'' said David
Toung, a telecommunications equipment analyst with Argus
Research.
But analysts said the revenue delay was a logistics problem
and not an indication of slow product demand or problems
within the company.
''People are wondering whether this is a timing issue or a
demand issue. But since (Lucent) management was very
specific about their expectations for the year, it seems to be
just some logistical issues,'' said Alex Cena, an analyst
with Salomon Smith Barney.
During the first quarter, Lucent's equipment sales to
telecommunications companies increased by 3 percent to a
record $6.1 billion, driven by sales of switching systems
with associated software, and optical and data networking
systems.
The equipment unit's revenues outside the United States
increased by a record 67 percent. Within the United States,
revenues decreased 19 percent, due in part to the delay of
revenues into the second quarter.
In its business communications unit, revenues increased 2
percent to $1.975 billion.
The microelectronics unit's revenues increased 6 percent to
$821 million.
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