Lucent Technologies Inc.’s stock fell late last week on news it expects operating results for its first fiscal quarter to be lower than analysts had estimated, based on preliminary results.
The company said revenues should fall in the range of $9.8 billion to $9.9 billion for the quarter ended Dec. 31, which is flat with the same quarter in 1998, and earnings per share should be between 36 cents and 39 cents, compared with 48 cents per share for the same period in 1998.
Prior to the announcement, analysts had expected Lucent to report EPS of 54 cents for the quarter, according to First Call Corp. By midday Friday, the consensus estimate had fallen to 37 cents per share, said First Call.
“We are clearly disappointed with the results for the quarter,” said Richard McGinn, chairman and chief executive officer of Lucent.
The news caused Lucent’s stock to tumble more than 25 percent in after-market trading Thursday, closing at just more than $69 Thursday and opening Friday at $51. Lucent’s stock traded as high as $84.19 last month, but has suffered along with other telecom companies in an overall market slump that characterized the first week of trading this year.
“We still expect our revenues to continue to grow three to five percentage points faster than the overall communications networking market,” said McGinn. “However, given the slow start for the year, we expect to be in the lower end of that range for fiscal 2000.”
Lucent noted analysts estimate the overall communications networking market is growing at about 14 percent each year. McGinn said the company expects bottom-line growth of about 20 percent to 25 percent for the fiscal year from last year’s EPS of $1.20.
The company attributed its lower-than-expected revenue and earnings to:
Faster-than-expected shifts in customer purchases to its newest 80-channel Dense Wave Division Multiplexing optical product line and greater demand for OC-192 capability on the 80-channels systems, which resulted in near-term manufacturing and capacity constraints;
Changes in customer implementation plans domestically and internationally, which led to delays in network deployments;
Lower software revenues, reflecting a trend by service providers to spread software acquisition activity throughout the year rather than concentrating it at the end of the year; and
Lower-than-anticipated gross margins from ramp-up costs associated with introducing and implementing new products and lower software revenues.
Lucent said it expects its capacity and deployment issues to be resolved by the end of its second fiscal quarter and major network deployments that have been delayed to resume this fiscal year.
The company plans to announce results for the quarter Jan. 20.
