Lucent Warns of Sharp Earnings Shortfall In Q1

Lucent Technologies Inc. warned investors today that its operating results for the first quarter of its fiscal year will be lower than expected, with flat revenues and a drop in earnings.

In a statement today, the U.S. telecommunications company said it expects to post revenues of between US$9.8 billion and $9.9 billion for the quarter that ended on Dec. 31, which are equivalent to the revenues it achieved in the same period a year ago. Earnings per share for the quarter are expected to range between 36 to 39 cents, compared to 48 cents during the same quarter last year, Lucent said.

That is significantly lower than the 54 cents per share predicted for Lucent by First Call/Thompson Financial, in its survey of 33 analysts.

"We are clearly disappointed with the results for the quarter," said Lucent Technologies Chairman and Chief Executive Officer Richard McGinn in today's statement.

Lucent attributed the weak revenues and drop-off in earnings to a number of different factors, including customers delaying network deployments. Some of those deferrals were related to the year 2000 problem, but more were due to certain customers facing delays in obtaining financing to build such networks, according to Lucent spokeswoman Lynn Newman.

Another factor was a drop-off in software revenues, because customers are spreading out their purchases more evenly throughout the year. That also resulted in lower gross margins for Lucent, as did the cost of introducing and implementing a variety of new products, Newman said.

Greater than expected demand for Lucent's newer optical products also contributed to the earnings shortfall, as constraints in manufacturing and deploying these products meant that Lucent could not meet all the demand, Newman said.

The company still expects growth of between 20 percent and 25 percent for the fiscal year over last year's earnings per share of $1.20, Lucent said in its statement.

For the second fiscal quarter Lucent predicts that its earnings will grow 25 percent to 35 percent over last year's 17 cents per share, and expects revenues of around 12 percent to 15 percent over last year's level of $8.78 billion.

Lucent also expects to resolve the optical products shortfall by the end of the current quarter and to see new networks deployed, both of which will contribute to the predicted higher earnings, according to Newman.

Lucent will announce its first quarter earnings on Jan. 20, 2000 after the close of trading on the New York Stock Exchange.

Lucent Technologies, in Murray Hill, New Jersey, can be reached at +1-908-582-8500 or at

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