| jgrove24@hotmail.com 2006-07-25, 10:33 pm |
| jgrove24@hotmail.com wrote:
> NEW YORK - Lucent Technologies said Monday that its revenue for the
> quarter that ended in June will be about $300 million less than Wall
> Street expected, with earnings per share also lagging estimates, as the
> maker of telecommunications gear was hurt by weak sales in the U.S. and
> China.
>
> Shares of Lucent fell more than 3 percent in after-hours trading after
> the announcement.
>
> Murray Hill, N.J.-based Lucent, which has agreed to be acquired by the
> giant French equipment maker Alcatel SA for $13.45 billion, said in a
> statement that sales for its fiscal third quarter totaled $2.04
> billion. That's well short of the $2.34 billion average estimate of
> analysts surveyed by Thomson First Call and 13 percent lower than its
> sales in the same period a year ago.
Loopy Lucent Nags Nortel
But while 2006 could still be strong, midyear progress reports suggest
a slowdown is afoot.
Lucent's (LU - commentary - Cramer's Take) announcement Monday of a
sales shortfall highlighted investor worries. Lucent laid the blame for
its third-quarter weakness on a slump in U.S. wireless-gear demand.
The news provided further evidence that telcos are looking to trim
spending rather than exceed their budgets. Stocks across the wireless
infrastructure sector were hit by Lucent's latest warning. Top wireless
gearmaker Ericsson (ERICY - commentary - Cramer's Take) fell 3%, Nortel
(NT - commentary - Cramer's Take) dropped 1%, and Powerwave (PWAV -
commentary - Cramer's Take) was down 2% in midday trading Tuseday.
Lucent shares were down 4%, a fall likely moderated after the company
confirmed it is still on track with its buyout by Alcatel.
For the fiscal third quarter, Lucent says earnings will be 2 cents a
share, about half of what Wall Street was expecting. And revenue for
the quarter ended last month was about $2.04 billion, well shy of the
$2.34 billion consensus target.
After sorting through the results, analysts pointed to Cingular -- a
venture of AT&T (T - commentary - Cramer's Take) and BellSouth (BLS -
commentary - Cramer's Take) -- and Verizon Wireless, co-owned by
Verizon (VZ - commentary - Cramer's Take) and Vodafone (VOD -
commentary - Cramer's Take), as the likely sources of the problem.
Cingular seems to be dragging its feet on things like budget approvals
to finance upgrade plans, writes Jefferies analyst George Notter in a
research note Tuesday. Cingular has about 18 major cities and
surrounding suburbs wired with its new universal
mobile-telecommunications systems, or UMTS, network. The company is
expected to have close to 100 cities covered by the end of the year.
Industry observers and analysts say they suspect Cingular is trying to
limit spending and also stay on course with its project goals. One
reason, say analysts, is that fast mobile Net access service hasn't
been in big demand yet, due largely to high prices.
As for Verizon Wireless, after a big splurge on evolution data-only, or
EV-DO, gear, the New Jersey phone giant is waiting for the next version
of the technology that handles voice traffic in addition to data. This
so-called EV-DO RevA gear is expected to be available at this fall, say
analysts.
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