Lucent Technologies Inc.'s third-quarter results indicate there will be no recovery in telecom for awhile.
Lucent last week posted its ninth-consecutive quarterly loss and said it would cut 7,000 more jobs. The company recorded a net loss of US$7.91 billion for the quarter vs. a $3.24 billion net loss in the same period a year ago.
Lucent also took a noncash charge related to deferred tax assets of $5.83 billion. Revenue for the quarter plunged 50 percent, to $2.95 billion from $5.89 billion in the year-ago period and off 16 percent sequentially, a greater drop than the 10 percent to 15 percent slip the company disclosed in a June warning.
The culprit once again is sharply curtailed capital spending among service providers. The spending constraints have intensified and are remaining in place longer than anybody expected, Lucent CEO Patricia Russo says.
This translates into at least another year of doldrums for our sector.
"The telecom industry is still caught in a downward spiral of weak investor confidence leading to lower service provider spending, leading to massive restructuring of equipment vendors and component makers," says analyst Bill Lesieur, director of Technology Business Research in Hampton, N.H. "2002 and most of 2003 will be an unprofitable year for many telecom equipment vendors."
Pro-forma revenue outside the U.S. was down 52 percent from the third quarter of 2001, while U.S. revenue fell 42 percent from the same period a year ago. On a sequential basis, pro-forma revenue dropped 15 percent in the U.S. and 18 percent outside the U.S.
Revenue from wireline network hardware tumbled 61 percent from last year's third quarter, and 21 percent sequentially. Switching/access and optical revenue declined 20 percent and 25 percent, respectively.
During the quarter Lucent shut down its LambdaManager product and dramatically reduced its development effort on the LambdaRouter given weakness in the optical market. Analysts are currently modeling flat overall wireline revenue of $6.5 billion for Lucent in 2002 and 2003.