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To: Mark Ambrose who wrote (981)	1/21/2000 3:23:00 PM
From: Mark Ambrose	Read Replies (1) \| Respond to of 1331

Lucent Falls on Drop in Profits (a copy from SI for the record) I'll start a rumor: CMVT to get that Saudi order. (see below) siliconinvestor.com ------------------------------------------------------------ Lucent Falls on Drop in Profits Jan 21 2:55pm ET NEW YORK (Reuters) - Shares of Lucent Technologies Inc. (LU.N) fell about 3 percent on Friday after the world's largest telecommunications equipment maker posted a 23 percent drop in first-quarter profits on flat sales. Shares of Lucent, the most widely held U.S. stock, shed 1-3/8 to 52-1/4 in heavy trading on the New York Stock Exchange, where it was among the most actively traded issues. The stock has fallen more than 24 percent since Jan. 6, when the company first warned that its fiscal first-quarter results would fall below Wall Street expectations. After the stock market closed on Thursday, Lucent said it earned $1.175 billion, or 36 cents a share, compared with $1.52 billion, or 48 cents a share, a year ago. Wall Street analysts, who recently trimmed their forecasts, had expected Lucent to earn 37 cents a share. Including one-time items, net income was $1.250 billion, or 38 cents a share. First-quarter revenues were flat at $9.9 billion, about $1 billion below analysts' previous forecasts. Lucent blamed the shortfall on delays in some customers' purchasing plans, its manufacturing constraints and its inability to develop more powerful products fast enough to meet customers' demands. The company said it planned to add more manufacturing capacity and staff to correct these problems by the end of the second quarter. PaineWebber said in a research report on Friday it believes Lucent can get through its near-term problems and that ``this is an opportune time to enter a high quality company in a high growth industry.' Lucent said first-quarter sales to telephone companies and other service providers fell 2 percent to $6.216 billion. Sales to large corporations, however, rose 4 percent to $2.005 billion. Sales in its traditional voice switches, which connect voice traffic across communications networks, declined in the quarter. Lucent said it expects to grow its legacy circuit switch portfolio by double digit rates in fiscal 2000. Sales of wireless products were flat in the quarter, largely because of a delay by a Saudi Arabian customer. The customer is expected to proceed with its order this year, Lucent said. The delayed Saudi order pushed Lucent's international sales down 8 percent, while sales in the U.S. climbed about 5 percent. ``Weakness overseas in the service provider network business concerns us, along with the challenging ramp-up of optoelectronics and fiber optic capacity,' ABN AMRO analyst Kenneth Leon wrote in a research note. Despite its slow start in the first quarter, Lucent expects to show strong improvement in the second half of the year. It expects full year revenues to grow by 17 percent. Some analysts, including Lehman Brothers' Steve Levy, said the optimistic outlook for the second half of the year may be too aggressive.