This is old news. She said the same thing some 3 weeks ago. Plus she also said during that same time that Lucent is not counting on the markets to improve to be profitable. I thought that was very good news indeed.
Here it is from May 5th,
05/05 09:28
Lucent CEO Russo Not Counting on Rise in Phone Company Spending
By Justin Baer
Murray Hill, New Jersey, May 5 (Bloomberg) -- Lucent Technologies Inc. Chief Executive Officer Patricia Russo said the biggest U.S. maker of phone equipment can stem losses next fiscal year even without a big pickup in spending by its customers.
``We're not counting on a lot of help from the market,'' Russo said in an interview. Last month, she said Lucent would trim costs by cutting another 6,000 jobs from a workforce that's been halved in the past year.
The 10 largest U.S. phone companies, a list that includes Lucent customers Verizon Communications Inc. and AT&T Corp., are on pace to spend a combined $45.2 billion this year on gear, software and other capital goods, according to a Lehman Brothers Inc. report. That's 24 percent below the 2002 budgets these companies announced in recent months, Lehman said.
Analysts are split on whether carriers will issue another wave of budget-cut announcements or increase spending later in the year to make up for the first-quarter sluggishness.
``I hope it's the latter, but I don't see evidence of it, to be honest,'' Russo said. ``We've said we'd drive the break-even point to somewhat below $4 billion (in quarterly sales).''
In the fiscal second quarter ended in March, Lucent's revenue totaled $3.52 billion.
`A Painful Time'
After misjudging the severity of the slowdown in telecommunications-equipment spending, Lucent in March said it would miss a previous goal of turning a quarterly profit, excluding certain costs, at some point this fiscal year, which ends in September. Some investors said Lucent may shed more expenses even to break even at some point next year.
``There's probably still more cost cutting they need to do,'' said Kenneth Smith, a money manager at Munder Capital Management who has sold his Lucent stake in the past year. ``Even now, I'm not sure they're truly prepared for what's going on. It's a painful time for them.''
Shares of Murray Hill, New Jersey-based Lucent fell 10 cents, or 2.2 percent, to $4.40 on Friday. They've plunged 59 percent in the past year and 22 percent since March 12, when the company delayed its profitability forecast.
Russo, who counted on U.S. customers for 69 percent of Lucent's sales last quarter, said Lucent didn't make the deeper cuts required to stem losses by September because she didn't want to shortchange funding for certain key product lines and research projects.
``We could make decisions that could get us to profitability sooner, but they would not be good decisions,'' Russo said.
Trimming Its Workforce
Lucent will pare its workforce to 50,000 by the end of September from the 56,000 employees it had on March 31.
Lehman Brothers analyst Steven Levy, who rates Lucent a ``strong buy'' and doesn't own the shares, predicts Lucent's cost cuts and a gradual rise in sales from new products may report a profit as early as the quarter ending this December.
``I believe they can do it,'' Levy said. ``
Some investors haven't ruled out more cuts in spending by large carriers, further postponing Lucent's return to profitability.
``It's a tough situation,'' Smith said. ``There's no place to hide right now.''
Lucent still needs to boost quarterly revenue to meet its new profit target. Russo said sales of Lucent equipment for phone and data networks may pick up in 2002 after dropping sharply during the past year.
Several new products will help spur demand, Russo said. The company has announced contract wins this year from Verizon, for gear that moves information through citywide optical networks, and Deutsche Telekom AG, for fiber-optic systems that transport traffic over greater distances. Russo said carriers are testing Lucent's TMX 880 switch, which lets phone companies offer additional data services to their customers.
Going It Alone
A year ago, Lucent was in talks to merge with France's Alcatel SA. Negotiations collapsed in late May after Lucent refused to cede control of the combined company. Russo, named CEO in January, said Lucent doesn't plan to revisit a similar sale or merger.
``I wasn't here when those discussions were going on, but there's no question that, as we speak, our focus is on thriving as a fully independent company,'' she said.
After spending the past year selling, spinning off and closing businesses, Lucent now would consider acquiring companies to add promising products.
``I wouldn't exclude the possibility of partnering for technology or acquiring it if it made excellent business sense,'' she said.
Russo said she's prioritized research projects aimed and designing more gear that delivers high-speed Internet connections on ordinary copper phone lines and wireless networks. The products are expected to clear bottlenecks that have formed on the networks closest to individual homes, businesses and wireless devices.
Russo said easing the congestion will help boost sales of phone companies' data services, which in turn increases overall network traffic. The faster traffic mounts, the more equipment carriers will need to expand the capacity of regional and long- distance networks, she said.
bloomberg.com |
