Looks like Lucent Technologies Inc. will not turn a profit this year after all Lucent last week warned that its second-quarter results would be disappointing, pushing its profit plans back to 2003. The company hoped to be profitable this year after two years of sinking fortunes, underscored by massive losses and layoffs.
Lucent now expects second-quarter revenue to show pro forma improvement of 10 percent or less instead of the expected 10 percent to 15 percent sequential gain. It attributed the lower forecast to a sudden, more pronounced slowdown in capital spending among the large carriers the company covets.
Analysts attribute the shortfall mostly to the U.S. wireline market, and to a lesser degree international wireline. Wireless sales are likely to be up 10 percent to 20 percent sequentially, according to UBS Warburg. Warburg believes CDMA 1xRT sales in the U.S. are strong.
The downcast quarter is also delaying Lucent's plans to spin off its Agere Systems component operations. Although the company's losses will narrow in the second quarter, they will not narrow enough to satisfy the bank covenants required under its loan agreements to spin Agere.
Lucent pushed the Agere spinoff date back to the third quarter, hoping that its earnings before interest, taxes, depreciation and amortization will be enough to meet the bank requirements.
The company will report its second-quarter results on April 22.