Lucent's Profits Beat Forecasts On Broad Strength
NEW YORK (Reuters) - Lucent Technologies Inc. (NYSE:LU - news), the world's largest
telecommunications-equipment maker, said Thursday that second quarter profits, excluding
charges, more than doubled, beating Wall Street expectations, as revenues increased 33 percent.
''This was an extremely strong quarter for Lucent both inside and outside the U.S. and across our
businesses as the company added more than $2 billion to the top line,'' Chief Executive Richard
McGinn said in a statement.
Lucent also reiterated its bullish profit and revenue growth forecasts for 1999 and said it would
sell its U.S. sales group that targets small and mid-size businesses to a newly formed company
led by Susan Mandl, the current chief executive of Newcourt Communications Finance. Terms of
the sale were not disclosed.
Murray Hill, N.J.-based Lucent's net income increased to $442 million or 16 cents a share,
compared with net income of $29 million or 1 cent a share a year ago. Both quarters included
acquisition-related charges.
Excluding the charges, Lucent's profits increased to $457 million or 17 cents a share, compared
with $186 million or 7 cents a share a year ago.
The results topped Wall Street's expectations of 15 cents, according to market research firm
First Call, which tracks analysts' estimates. Lucent has beat Wall Street's earnings expectations
every quarter since it was spun off from AT&T Corp. (NYSE:T - news) in 1996.
Second quarter revenues increased 33 percent to $8.220 billion, compared with $6.184 billion
in the year-ago quarter. The second quarter revenue growth followed a shortfall in the first fiscal
quarter, when a problem in finalizing some contracts forced the company to delay the recording
of some revenues until the second quarter.
Lucent, which plans to acquire data networking company Ascend Communications Inc.
(Nasdaq:ASND - news), said its quarterly profit growth was driven by higher revenues,
improved gross margins and a change in its tax rate.
Lucent reiterated it is on track to increase fiscal 1999 revenues by 19 percent to 20 percent and
earnings per share by about 35 percent, excluding one-time events.
During the second quarter, Lucent equipment sales to telecommunications companies increased
by 40 percent over the year-ago quarter to $5.149 billion, driven by sales of wireless phone
systems, and optical and data networking systems.
Sales of equipment to businesses increased 15 percent versus the year-ago quarter to $1.987
billion. Microelectronic or chip sales increased 21 percent over the year-ago quarter to $851
million, driven by sales of optoelectronics components and customized chips for high
performance communications, data networking and computing.
As a percentage of revenue, gross margin for the quarter improved to 47.4 percent from 44.4
percent in the year-ago quarter, reflecting a more favorable mix of more lucrative products and
improved performance of multiyear contracts.
Selling, general and administrative expenses (SG&A) accounted for 23.1 percent of revenues in
the quarter, compared with 24.3 percent in the period a year-ago.
Research and development (R&D) spending, excluding one-time charges, increased 22 percent
over the year-ago quarter from investments in high growth areas such as wireless, data
networking, optical networking, switching and microelectronics. |
