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To: Johnny Canuck who wrote (39906)	7/16/2003 12:46:13 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 72032

Lucent delays profitability plans By Reuters July 15, 2003, 8:30 PM PT Lucent Technologies said Tuesday it would not meet its targets for profitability in the current fiscal year due to a weak wireless market. The telecommunications equipment maker also said it expects wider third-quarter losses than foreseen by Wall Street, and its shares fell 10 percent in after-hours trading. Lucent, which has been a poster child for the telecom equipment industry's struggles, said it saw continued uncertainty in the telecom market, especially in the wireless sector, which accounts for about half the company's sales. The company now expects to return to profits sometime in its 2004 fiscal year, which begins in October. Up to now, it had repeatedly said it was targeting a return to profits by the end of fiscal 2003. "We now expect that our return to profitability will occur in fiscal 2004," Lucent Chief Financial officer Frank D'Amelio said in a statement, adding the company plans to cut costs. Company officials did not say whether those plans would include more job cuts. Lucent has already said it would reduce its work force to 35,000 by the end of September from 38,500 at the end of March. Several analysts expect that number to go lower. Other analysts said that Lucent, which has scaled down its business from 106,000 employees in January 2001, had already cut the fat out of the business. "Here we go again," Shawn Campbell, principal with Chicago-based Campbell Asset Management said of the company's repeated losses, cuts and warnings. "Their problem now is basically a revenue problem, not a cost-cutting problem." In addition to job cuts since it launched its restructuring in January 2001, Lucent sold noncore assets and rang up almost $12 billion in net losses in fiscal 2002. Lucent's shares fell to $1.72 in after-hours trading on Instinet from its closing price of $1.92 on the New York Stock Exchange. Credit rating agency Standard & Poor's said Tuesday it may cut its debt ratings on Lucent deeper into junk territory after the company pushed out its return to profits. Lucent, based in Murray Hill, N.J., said it expects third-quarter revenue to drop about 18 percent to about $1.97 billion, from $2.4 billion in the second quarter. It blamed a decline in revenue from its North American wireless business and delayed acceptance of a contracted job by one of its customers for almost all of the drop. One investor said Lucent executives do not seem to have a handle on what is happening in the telecom sector. "The story is still the same," said Richard Steinberg, president of Steinberg Global Asset Management, a Florida asset management firm that owns almost 54,000 Lucent shares. "There's still no demand yet or turn in this business. This is just going to delay any rebound." The company, one of the world's largest telecom equipment makers along with Canada's Nortel Networks and France's Alcatel, expects to report a net loss of 6 to 8 cents a share, and said it did not expect a significant impact from one-time items. Analysts were expecting a third-quarter loss of 5 cents a share before one-time items on sales of almost $2.3 billion, according to Reuters Research, a unit of Reuters Group. They expected Lucent to post a loss of 1 cent a share before one-time items in fiscal 2004, Reuters Research said. Lucent, which is scheduled to report third-quarter results on July 23, said it will end the quarter with $4.9 billion in cash and short-term investments, up from $3.4 billion in the previous quarter. However, it raised $1.6 billion in the third quarter in a convertible stock offering.