Thread ----some tough talk from McGinn---Lucent Technologies Inc.
The Wall Street Journal -- October 27, 1999
Technology:
Lucent Earnings Quadruple as Sales Gain 23%
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By Stephanie N. Mehta
Staff Reporter of The Wall Street Journal
Lucent Technologies Inc., the telecommunications-gear maker, posted better-than-expected earnings for its fiscal fourth quarter as phone companies continued to expand and revamp their networks.
But the company said sales to corporate customers were flat for the quarter, dragged down by the performance of its Systimax business, which provides wiring for buildings and corporate campuses. Systimax "is going to improve or we're going to have a different disposition of the business," said Richard McGinn, Lucent's chairman and chief executive officer.
Lucent, based in Murray Hill, N.J., said net income for the quarter ended Sept. 30 more than quadrupled to $948 million, or 30 cents a diluted share, from $220 million, or seven cents a share, a year earlier.
Excluding a $167 million gain on the sale of its investment in data-networking company Juniper Networks Inc. and $191 million in costs associated with acquisitions, Lucent would have earned $972 million, or 31 cents a share, in the quarter. That represents a 50% gain from $647 million, or 21 cents a share, when one-time items are excluded in the year-earlier quarter.
Analysts surveyed by First Call/Thomson Financial had expected the gear maker to post earnings before one-time items of 29 cents a share for the current quarter.
Revenue for the quarter rose 23% to $10.58 billion from $8.57 billion a year earlier, powered by strong sales to local, long-distance and wireless telephone companies. These companies are buying new gear to help them make the transition to socalled next-generation networks based on Internet technologies. At the same time, they continue to buy more traditional products to provide reliable voice and wireless services.
Sales to phone companies rose by 32% to $6.92 billion for the quarter. "For a company to generate over 30% growth in their network-operator business is unbelievable," said Kenneth Leon, an analyst with ABN Amro.
Lucent said it expects its overall revenue to grow by 17% to 20% in fiscal 2000. To do so, the company probably will have to boost the performance of its business-communications unit, which sells products and services to corporations. Mr. McGinn said the company would focus on fast-growing segments of the business market, such as customer-service call centers and messaging services like voice mail.
For the fiscal year, Lucent said net income more than quadrupled to $4.77 billion, or $1.52 a diluted share, from $1.04 billion, or 34 cents a share, a year earlier. Revenue climbed 20% to $38.3 billion from $31.81 billion.
In New York Stock Exchange composite trading, Lucent rose $3, or 5%, to $62.875.
Separately, Lucent announced a realignment of the company along four core businesses. The new business units are service-provider networks, which will serve phone companies and cable-TV operators; enterprise networks, which will serve corporate customers; professional services, which will include the company's consulting and network-services businesses; and microelectronics and communications technologies, which will consist of the company's computer-chip business and intellectual-property division.
In addition, Dan Stanzione, chief operating officer and president of Bell Labs, will become a special adviser to Mr. McGinn, effective immediately. Mr. McGinn will assume some chief-operatingofficer duties. Arun Netravali, Lucent's 52-year-old executive vice president of research, will become president of Bell Labs. Mr. Stanzione, 54, said in an interview that he long had been planning to "step away from day-to-day operating responsibilities" around this time. Mr. Stanzione said he will focus on emerging technologies and strategies, particularly in the area of "next generation" networks. Journal Link: For video of Lucent's CEO Richard McGinn commenting on earnings, see The Wall Street Journal Interactive Edition at wsj.com
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