Lucent earnings jump on wireless strength, cost cutting

Lucent Technologies today reported its fourth consecutive quarterly profit and raised its sales estimate for the rest of the year.

Driven in part by increases in wireless sales and reduced operating expenses, Lucent reported fiscal third quarter revenues of $2.19 billion and net income of $387 million or 8 cents per diluted share. That compares to $1.96 billion in revenue and a net loss of $254 million or 7 cents per diluted share for the year ago quarter. On a sequential basis, revenue was essentially flat though net income increased from $68 million or 2 cents per diluted share in the second quarter of fiscal 2004.

Among the quarterly highlights was the announcement of a $5 billion supply agreement with Verizon Wireless last week and the acquisition of Telica to beef up the company’s Accelerate voice-over-IP portfolio. Lucent Technologies Chairman and CEO Patricia Russo said the company continues to see strength in its packages of multiple network elements combined with its professional services from the Lucent Worldwide Services group.

"I do think it’s important to acknowledge that we’re clearly seeing an interest in this whole notion of converged services regardless of the access vehicle," she said during a call with analysts today.

On a segmented basis, the company’s Integrated Network Solutions, which include optical and access products, produced revenue of $715 million, a decrease of 3% sequentially and 12% compared with the year-ago quarter. The Mobility group reported revenues of $986 million, an increase of 4% sequentially and 58% compared with the year-ago quarter while LWS reported revenue of $473 million, a decrease of 1% sequentially and an increase of 5% compared with the year-ago quarter. Operating expenses for the third quarter were $598 million compared to $623 million for the second quarter.

Within the LWS segment, Russo said the company has been seeing a decline in its traditional installation services but is encouraged by a jump in the more profitable maintenance, management and professional services.

Going forward, Lucent is providing guidance of revenue growth that will be in the mid-single digits. Previously the company had predicted that it would be closer to the break-even point.

"We all agree that the industry is in recovery but we don’t know if it’s at full steam," Russo said. "What’s unclear is the pace and rate at which spending is going to occur."