Lucent posts $423 million net loss and Y2K court casesgreenspun.com : LUSENET : Y2K discussion group : One Thread |
Chief financial officer Frank D'Amelio gave an upbeat outlook for the second quarter, saying revenue is expected to grow 10 percent to 15 percent and "our bottom line to improve at an even greater rate."Ariane Mahler, communications equipment analyst at Dresdner Kleinwort Wasserstein, said she was "very impressed by the revenue guidance."
"It sounds like they have some contracts up their sleeve," she said.
Mahler said it appears Lucent has gotten its cash-flow problem under control, and overall its results were very positive.
More than a year into a massive restructuring program, Lucent posted a net loss of $423 million, or 14 cents per share for the quarter ended Dec. 31, compared with a loss of $464 million, or 14 cents per share, in the year-ago quarter.
Excluding one-time items including the sale of its optical-fiber unit, the company lost $757 million, or 23 cents a share. That beat by a penny the forecast of analysts surveyed by Thomson Financial/First Call, which was cut by a penny after Lucent on Dec. 13 said its fiscal first-quarter loss would range between 23 cents and 26 cents.
"These results came in the face of what we perceive as the low point of Lucent sales given the current market condition," Henry Schacht, chairman of the board, told analysts during a conference call.
Schacht said in an interview that Lucent expects service providers that bought lots of its gear in the first half of 2001, then cut back as the economy soured, will resume normal buying patterns with the start of a new budget year.
Revenues for the first quarter totaled $3.58 billion, slightly more than the company had forecast last month, but down 18 percent from $4.35 billion in the first quarter of 2000.
Lucent had predicted the sales drop as the weak economy continues to limit capital spending by the telephone and Internet service providers that buy Lucent's telecommunications gear, but the company said the narrower loss showed its restructuring moves were getting traction.
"You should expect to see continued progress," Patricia Russo, who took over for Schacht as president and chief executive two weeks ago, told the analysts.
Russo, one of Lucent's founding executives, spent nearly 20 years with AT&T and then spinoff Lucent before leaving in August 2000 for the No. 2 post at photographic products company Eastman Kodak Co.
"I'm confident in the plan that our team is executing," she said. "It's produced a more focused strategy with a streamlined portfolio" of products.
On top of previously announced job cuts, about 2,000 more jobs will leave Lucent's payroll by June, through the pending sale of two businesses, D'Amelio said Tuesday.
Lucent has slashed its staff from 123,000 to 74,000 as of Dec. 31 through voluntary buyouts, layoffs and sales or outsourcing of some businesses. Another 12,000 workers at its Agere unit will leave the payroll if Lucent can complete its repeatedly delayed spinoff of Agere by June. D'Amelio said projections now show that with the sales of two businesses, more outsourcing of manufacturing and other steps, the work force should drop below 55,000 by June.
Schacht said he expects by March that Lucent will meet its bankers' final condition to spin off Agere: breaking even for a quarter before costs such as interest, taxes and depreciation.
"We were several hundred million (dollars) off" this quarter, Schacht said.
He again predicted Lucent will show a profit sometime in 2002.
Shares of Lucent rose 25 cents, or 3.7 percent, to close at $6.94 in trading Tuesday on the New York Stock Exchange.
Lucent Telecommunications Equipment Cases:
Beatie, King & Abate, LLP v. Lucent Technologies
Supreme Court of New York, County of New York
No. 99600192Modern Drummer Publications, Inc. v. Lucent Technologies
Superior Court of New Jersey, Law Division, Middlesex County
Filed January 29, 1999Community Health Association, et al. v. Lucent Technologies
Circuit Court, Kanawha County, West VirginiaMedimatch v. Lucent Technologies
United States District Court, Northern District of California
Filed June 30, 1999
99-CV-3198Counsel:
Medimatch Plaintiffs: Leiff, Cabraser, Heimann and Bernstein, LLPBeatie Plaintiffs: Russell Beatie of Beatie and Osborn LLP, New York, NY
Modern Drummer Plaintiffs: Russell Beatie, Beatie and Osborn LLP; Ward S. Taggart, Meredith, Meredith & Chase, Trenton, NJ
Community Health Plaintiffs: James C. Peterson, R. Edison Hill, Harry G. Deitzler, Hill, Peterson, Carper, Bee & Deitzler, P.L.L.C., Charleston, WV
Defendant: James B. Tyrrell, Jr., Latham & Watkins, New York, NY
Defendant: Latham & Watkins, San Francisco, CA
Summary of Claim: Class actions against Lucent alleging that various telecommunications products are not Y2K compliant and that plaintiffs have been or will in the future be forced to purchase upgrades or alternative products.
Causes of Action: Unfair trade practices, breach of express and implied warranties of merchantability, breach of contract. The Community Health Complaint adds a count sounding in strict liability for product defects.
Status: Pending; however, a motion to dismiss has been filed in the Beatie action asserting that the plaintiffs have not suffered any actionable injury
Documents:
Memorandum of Lucent in Support of Motion to Dismiss (Beatie)
Complaint (Medimatch)
Status: 4/00: The Federal Court in Community Health v. Lucent has remanded the matter to State Court thus rejecting arguments that the Y2K Act gives federal courts a basis for jurisdiction independent of the federal removal statute.
The Federation