Lucent sees signs of improvement
The struggling company tells analysts that its third-quarter results should be in line with Wall Street expectations if it maintains its current sales pace.
Shares were up 48 cents to $8.48 by market close. They went as high as $8.81 earlier in the day.
Briefing analysts at the SuperComm show in Atlanta, CEO Henry Schacht said business in the company's June quarter will improve from the preceding quarter.
"We review our sales outlook weekly. We looked again Monday. If the outlook we saw yesterday (continues), we will show modest sequential gains over the $5.91 billion" in revenue recorded in the second quarter, he said. "We continue to expect greater sequential improvement over (the second quarter's) 37 cent loss."
That forecast is roughly in line with what Wall Street is expecting. Lucent is expected to lose 21 cents a share on sales of $6.06 billion.
Schacht said Lucent has seen cutbacks in spending by telecom companies, like virtually every other supplier in the industry. But he added that larger service providers are still continuing to spend. "Although several of them are making modest reductions in the amount that they're spending, the amount that they're spending is still substantial," he said.
Schacht stressed that the company was on the road to recovery, despite last week's collapse of a proposed $32 billion merger with French telecom equipment manufacturer Alcatel. Lucent executives were reportedly upset by what they saw as a merger of equals becoming a takeover bid.
"We decided it was in best interest of our shareholders, customers and employees to continue on our own path," he said. "Walking away was a sign of strength and our belief that (the) turnaround is on course and will be executed."
In the past few months, Lucent has been undergoing a massive overhaul of its business, including the elimination of roughly 10,000 jobs. The company managed to secure $4.5 billion of financing in March to fund its business and stave off junk status for its bonds.
Schacht said that although he is generally pleased with the progress Lucent has made, its turnaround plan is not complete.
Schacht said the company will accelerate its cost cutting. "Our job now is to build on the progress we've made and pick up the pace," he said.
"As we finish the third quarter and begin to look at (our fiscal 2002) plan, we are going to accelerate our cost-reduction efforts. We will begin rolling those out in the next several weeks and some a bit sooner," he said. "It will be very clear in a very short period of time what these...actions will be."
Schacht would not say whether those measures would include additional layoffs or asset sales. He did say that the company was continuing to look for a buyer for its fiber-optic division. That sale had been delayed somewhat, since Alactel was one of the bidders for the unit, but Lucent has "multiple bidders," he said, adding that "we would expect that to come to conclusion relatively soon."
Schacht took over in October 2000 after the board ousted former CEO Richard McGinn. Lucent has been looking for a CEO since then. On Tuesday's conference call, Schacht said Lucent is continuing its search for a CEO, but said nothing is imminent. "We only have one CEO at a time, and I'm the CEO," he said.
In its most recent quarter, the company posted revenue from continuing operations of $5.9 billion, down 17 percent from the year ago period.
Lucent was also rocked recently by the indictments of three scientists on charges they attempted to steal trade secrets from the company.