Lucent expects 2006 revenue decline

After having previously anticipated no revenue growth this year, Lucent Technologies now expects its fiscal 2006 revenue to be down from the $9.4 billion it reported last year.

Reporting its second-quarter earnings this morning (ended March 31, 2006), the company projected a $500 million revenue decline in China and India this fiscal year (ending Sept. 30, 2006) due to declining sales of PHS, delays in the issuance of 3G licenses in China and Lucent’s bowing out of India’s most competitive markets. Those issues caused Lucent’s second-quarter international revenue to be down 28% from a year earlier.

In a statement released by the equipment vendor this morning, Chief Financial Officer John Kritzmacher said, “The ramp-up in spending is occurring more slowly than we anticipated. While we continue to expect revenues in the second half of fiscal 2006 to improve significantly over the first half, we now expect annual revenues for fiscal 2006 to be down year over year.”

Lucent reported a net income of $181 million (or 4 cents per diluted share) for the second quarter, after reporting a net loss of $104 million in the first quarter and net income of $267 million a year ago. The company reported $2.14 billion in revenue for the quarter, a 4% increase sequentially and 8% decline from a year ago.

U.S. revenue increased 11% sequentially, and 3% from a year ago, to $1.5 billion. North American revenue for the first half of the year is down from a year earlier.

"Lucent shareholders are indeed the big winners here," Susquehanna Financial Group analyst Joe Chiasson wrote in a research note today, "given that the Alcatel merger agreement likely rescues them from what would otherwise be a $2.00 to $2.25 Lucent stock price on its own merits."