Lucent stays the course

Telecommunications equipment giant reports fourth straight quarter of profitability, raises expectations for its fiscal year.

Marguerite Reardon Former senior reporter

Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.

See full bio

Marguerite Reardon

July 21, 2004 4:14 p.m. PT

2 min read

Lucent Technologies reported its fourth straight quarterly profit, buoyed by growth in wireless and Internet Protocol telephony equipment sales.

The telecommunications equipment giant also slightly increased expectations for the fiscal year, which ends in September. The increase in yearly expectations is a good sign that Lucent executives are confident that strong sales will continue in the final two months of the fourth quarter.

For the company's third quarter, ended in June, it posted a net income of $387 million, or 8 cents a share. It reported a loss of $254 million, or 7 cents a share, during the same quarter last year. The company's revenue was up 11 percent from a year ago to $2.19 billion.

Excluding one-time gains and losses, Lucent said it earned 4 cents a share. Analysts had expected a profit of 2 cents per share, according to Thomson First Call.

Lucent, one of the largest telecommunications gear providers in the world, said growth was driven by strong demand for its wireless and voice over Internet Protocol (VoIP) products. The company's wireless business was up 4 percent from the previous quarter to $986 million. And it was up 58 percent from a year ago.

The company has recently won some large contracts in wireless. Last week, it announced a $5 billion deal with Verizon Wireless to supply equipment and services for the carrier's next-generation data network. This contract was a renewal and expansion of an earlier contract Lucent had with Verizon.

Sales of Lucent's traditional wireline voice equipment fell 3 percent from last quarter. Services revenue also fell 1 percent. Part of the decline in wireline voice equipment was due to an unexpected dip in sales of optical gear, Steven Levy, an analyst at Lehman Bros., wrote in a research note to investors.

Lucent Chief Financial Officer Frank D'Amelio said he expects annual revenue to increase on a percentage basis in "the mid-single digits" for 2004, compared with a year earlier. Previously, the company had predicted an increase in sales for fiscal 2004 in the low single digits.

Lucent, which competes with Nortel Networks and Alcatel, became the poster child of the post-bubble technology sector, suffering 13 straight quarters of net losses. The company finally returned to profitability during the September quarter of 2003. Recently, the company's incremental successes have signaled a recovery in the telecommunications equipment sector, as carriers begin spending on new gear.