Lucent profits dive

Lucent Technologies today said profits fell 79% in the third fiscal quarter to $79 million off of forewarned shortfalls in wireless infrastructure revenues in North America. Total Q3 sales fell from $2.35 billion to $2.05 billion, also in line with the earnings warning Lucent issued on July 10.

In North America, Lucent's primary customers are the CDMA giants Verizon Wireless and Sprint, both of which have deployed Lucent's EV-DO technology and are in the process of upgrading to EV-DO revision A. Revenues in the mobile networks division fell 17% from the third quarter of last year to $877 million, but in the U.S. the shortfall was even greater, falling $180 million or 22%, which Lucent officials blamed on an unfavorable shift in product sales in CDMA 1X and lower volumes overall.

The mobile networks unit definitely took a hit in the last quarter, admitted CEO Pat Russo, but she stressed that those results reflected a temporary shift in spending from CDMA carriers in one market and did not reflect Lucent's business opportunities going forward.

"CDMA continues to represent a large sustainable market," Russo said, citing figures that the total CDMA global sales represent an $8 billion market in both 2006 and 2007. "In developed markets CDMA networks will continue to play a role in delivering high-end services such as mobile broadband access, multimedia content and voice over IP. The majority of Lucent's customers in the U.S., Canada, New Zealand, Asia and Latin America have upgraded or are about to upgrade their networks to EV-DO, and most of them have confirmed their intentions to migrate their networks to the next-generation of EV-DO, known as Rev. A."

In fact, due to two new Rev. A contracts with Telecom New Zealand and Verizon Wireless, Lucent will have its latest CDMA 3G technology commercially ready in September, making the fourth fiscal quarter the mobile networks division's biggest grossing quarter of the year, Lucent's chief financial officer John Kritzmacher said.

Though wireless revenues suffered, Lucent said the company is experiencing growth in many of its other technology areas, including demand for optical equipment in North America and Europe, IPTV sales and a leadership position in IP multimedia subsystem convergence technologies.

Revenues in its multimedia networks unit--which includes optical, access and data networks—increased 17% to $454 million. However, its converged core unit saw sales fall 3% to $147 million. Its services unit saw a 6% revenue gain to $581 million.