CNET también está disponible en español.

Ir a español

Don't show this again

Tech Industry

Lucent profits dip

Despite growth in its wireless business, slow sales of wireline products hurt company's quarter.

Shares of Lucent Technologies dipped on Wednesday, when the company announced a 53 percent decline in quarterly profits resulting from weak wireline telephone equipment sales and rising expenses.

The telecommunications equipment maker reported net income for its first fiscal quarter, which ended Dec. 31, of $174 million, or 4 cents per share. This compared to net income of $374 million, or 7 cents per share, a year ago.

Shares in the company fell 27 cents, 7.3 percent, to $3.43 on the news.

Revenues for the company were actually up for the quarter, totaling $2.34 billion. This was a 3 percent increase from revenues of $2.26 billion reported for the same period a year ago.

While sales of wireless gear came in strong for the quarter, sales in Lucent's traditional telephone equipment business fell. Operating income from Lucent's wireless-equipment business more than doubled to $390 million from $158 million a year. But income on the company's network solutions business, which includes its traditional telephone equipment and new Internet Protocol products, was down nearly 90 percent to $23 million from $210 million in the same period a year ago.

Lucent, among the equipment suppliers hardest hit when the telecommunications market went bust a few years ago, has been struggling to make a comeback. In fiscal 2004, the company turned a profit for the first time since 2000. But Wednesday's report indicates that Lucent still has a long road to full recovery.

The company is trying to capitalize on a shift in the telecommunications equipment market away from traditional circuit-based gear used to maintain existing telephone service and toward newer technologies like Internet Protocol, which can be used to build newer, more cost-effective networks. Much of Lucent's growth over the past year has come from supplying equipment to carriers building new wireless networks.

But so far, the shift in spending toward new Internet-related and wireless technology has not offset the decline in sales of Lucent's traditional equipment. As a result, analysts say, Lucent must continue to cut costs.

"Our contacts continue to suggest that Lucent could reduce expenses," Simon Leopold, an analyst at Morgan Keegan, said in a research note published Wednesday. "We think much of these savings will come through shifting jobs offshore, which is a topic we think the company hesitates to discuss publicly."