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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: David Hansen who wrote (21161)	1/23/2003 10:56:26 PM
From: elmatador	Read Replies (1) \| Respond to of 21876

Telecoms braced for another year of decline By Peter Thal Larsen in Los Angeles, Jonathan Moules in New York and Richard Waters in San Francis Published: January 23 2003 12:59 \| Last Updated: January 23 2003 12:59 The US telecommunications industry is bracing itself for another year of decline as it grapples with weaker economic conditions and the continued fallout from the 1990s investment boom. AT&T added to the gloom on Thursday, warning that spending on telecoms services was likely to fall again, causing a further slide in its revenues, which dropped 10 per cent last year. BellSouth, the big regional operator, on Thursday reported a 7 per cent decline in revenues for 2002. The gloomy statements will also raise further concerns about the health of telecoms equipment manufacturers. AT&T said it would cut capital spending to between $3.3bn and $3.5bn this year, from $3.9bn in 2002. "We need fewer suppliers," said Glen Macdonald, vice-president of Adventis, the strategy consultancy. "The industry is still not completely cleansed of excess investment in network facilities." Despite reporting heavy losses in the final months of last year, some of the biggest North American telecoms equipment makers on Thursday said they thought the worst was behind them and that profits would return this year. However, similar claims made a year ago turned out to be premature, as another lurch down in the fortunes of telecoms services companies, punctuated by the bankruptcy of WorldCom, forced a round of capital spending cuts. AT&T's statement wiped nearly a fifth off the value off its shares, which on Thursday closed down $4.83, or 19.1 per cent, at $20.49. Shares in BellSouth ended the day down 7 per cent. Investors were surprised by the decline in AT&T's business services division, thought to be well-positioned to take advantage of the collapse of rivals such as WorldCom and Global Crossing. But Tom Horton, AT&T chief financial officer, said weakness in certain sectors had undermined any growth. "We've got clear data that we are taking share. But it's a pretty tough market place in terms of demand - especially among telecom- intensive sectors such as travel and financial services." In the consumer market, AT&T's long-distance business continued its steady decline amid falling prices and increased competition from Baby Bell operators, which recently got regulatory approval to offer long-distance services to local customers. However, it is unclear whether long-distance will be enough to stem the decline in revenues for Baby Bells, which are seeing customers replace telephone lines with wireless phones or high-speed data connections. The Federal Communications Commission is considering whether to offer the Baby Bells some relief by phasing out a provision that allows competitors, including AT&T, to offer rival local services by renting Baby Bell lines. David Dorman, AT&T chairman and chief executive, yesterday hinted the company might have to stop offering local services if the provision was changed. Suppliers of telecoms equipment are focusing their future hopes on supplying mobile phone networks rather than the Bells.