After two years of financial heartache underlined by massive losses and layoffs, Lucent Technologies Inc. started off 2002 proclaiming expected profits by year's end. Two months later, the company is backtracking, pushing profit and positive cash-flow expectations back to 2003 and cutting expectations for sequential revenue improvement for the second quarter.
The large telecommunication carriers Lucent has been counting on to pull it into the black continue to slow down their capital spending, the Murray Hill, New Jersey-based company said in a Tuesday announcement. Lucent now expects revenues to show pro forma improvement of 10 percent or less for the second fiscal quarter instead of the 10 percent to 15 percent sequential gain predicted during the company's quarterly talk with investors in January.
The company's losses will narrow in the second quarter, but not enough to satisfy the bank covenants required under its loan agreements in order for it to spin off its Agere Systems Inc. circuit design business on schedule. Lucent pushed the Agere spin-off date back to the third quarter, hoping that its earnings before interest, taxes, depreciation and amortization will be enough to meet the bank requirements.