Although it has yet to release its first-quarter earnings, Lucent Technologies is expected by telecommunications industry watchers to make even deeper cuts in its already struggling business.
The Murray Hill, N.J.-based company announced in January plans to trim its workforce from 62,000 to less than 55,000 by June and last month issued an earnings warning. The Wall Street Journal today reported Lucent would cut 5,000 more jobs by the end of June, but a Lucent spokeswoman refused to confirm or deny the report, saying only that the company would provide an update with its April 22 quarterly financial report.
Lucent's stock price has dropped from US$7 per share to $4 per share during the past three months, and one of its chief rivals, Brampton, Ontario-based Nortel Networks Inc., said this week that it would miss its first-quarter performance targets.
"It's absolutely likely [Lucent] will keep making small cuts where they can," said Joy Mukherjee, an analyst at A.G. Edwards & Sons Inc. in St. Louis.
Mukherjee noted that the regional telephone companies that form the bulk of Lucent's and Nortel's business expect minimal growth this year, so those vendors aren't likely to see a major uptick in capital spending anytime soon. "I don't see any applications out there that can push this forward," he said.
Still, Mukherjee said, telecommunications providers should avoid making a "cut to the bone."
"When demand comes back, someone will have to support those customers," he said.