Lucent Technologies Inc. posted a loss, while both Qualcomm Inc. and Samsung Electronics Co. recorded profits in their quarterly reports last week.
In spite of Lucent’s loss, the company rebounded in modest market confidence as its liquidity problems were replaced by a sense that the New Jersey-based telecom equipment company may have, at least in the immediate future, laid to rest the shadows of bankruptcy and possible takeover.
While posting a profit, San Diego-based Qualcomm fell behind the net profits it reported the same period a year earlier, although it experienced a rise in revenue. Samsung’s net profit came in the context of a revenue slide.
Lucent said it suffered a net loss of $3.69 billion, or $1.08 cents a share, compared with pro forma profits of $509 million, or 16 cents per diluted share, in the same quarter a year earlier. This excludes its microelectronics unit, Agere Systems. Company revenue dropped from $7.2 billion a year earlier to $5.9 billion, amounting to 17-percent slide.
In the course of the quarter, Lucent had a restructuring charge of $2.7 billion, which exceeded the $1.2 billion to $1.6 billion restructuring charge the company stated earlier. Its restructuring moves included the spinoff of Avaya Inc., its enterprise networking unit, and the initial public offering for its microelectronic unit, Agere.
Lucent, which cut 2,000 jobs out of 10,000 as part of its cost-cutting program, said its restructuring agenda is on track.
“The results confirm that we know what we are doing, and we are doing it,” said Chief Financial Officer Deborah Hopkins.
The company has to grapple with a loss of $700 million in loans to Winstar Communications, which has already filed a lawsuit against Lucent, and is seeking protection under Chapter 11 of the U.S. Bankruptcy Code. Winstar seeks $10 billion in damages, blaming Lucent for a breach of contract and a failure to supply it with more than $90 million in funding.
The company’s cash reserves stood at $1.4 billion at the end of the quarter against $3.8 billion at the end of the first quarter. It also drew on $400 million of its $4.5 billion in credit. The company hopes to improve its cash situation with the planned sale of its fiber-optic cable business, which could rake in between $5 billion and $8 billion.
“Our seven-point restructuring plan is showing progress and we expect that to continue in the third and fourth quarters,” said Henry Schacht, Lucent’s chief executive.
Qualcomm posted a net income of $149 million, or 18 cents a diluted share, against $199 million, or 25 cents a share, for the same period last year, representing a 25-percent drop.
Revenue picked up from $649 million in the last quarter to $713 million, beating analysts’ estimates of $689 million. This boost came from 16 million CDMA chipsets it shipped in the course of the quarter. But the company expects to ship about 14 million chipsets in its third quarter, below previous projections of more than 16 million. This makes its third-quarter earnings prediction drop from 32 cents to 21 cents.
Credit Suisse First Boston believes that Qualcomm’s positive signals may dim in the next few years because of the limited customers of its CDMA technology and the anticipated dominance of the W-CDMA technology.
“We believe the company’s concentration with a few carriers makes it especially vulnerable to country-specific risks, as indicated by last year’s Korean subsidy ban and this year’s slowdown in the United States’ economy,” wrote Tim Long of CSFB.
But the company is optimistic. “The worldwide market for CDMA continues to grow as subscribers are added to second-generation cdmaOne networks, new markets are opened and third-generation CDMA 1x networks are deployed,’ said Irwin Jacobs, Qualcomm’s chairman and chief executive officer.
Samsung’s net profit rose to $944.4 million compared with $881 million in the same quarter a year ago. The company said sales dropped to $6.5 billion in the first three months of the year from $6.9 billion. The company expects a slump in sales this year to single digits in contrast to 30 percent last year.
The company said slowing demand for memory chips will hurt its sales profiles, which had an eight-percent slip in the quarter.
Samsung’s operating profit rose to $1.2 billion, a 10-percent jump from last year’s $1.1 billion.
