MURRAY HILL, N.J.-Executives of Lucent Technologies Inc. say they expect the company to continue growing faster than the expanding telecommunications market and expect to take market share from competitors.
One day before the Sept. 18 statement, Lucent released results for the third quarter, which ended June 30, that showed a net loss of 17 cents per share-all related to $668 million the company paid toward two acquisitions which closed June 30: Yurie Systems Inc., a developer of carrier Asynchronous Transfer Mode access equipment and technology, and Optimay, a producer of microelectronics Global System for Mobile communications cellular handset software technology.
Excluding those one-time charges, Lucent would have posted a net gain of 32 cents per share on revenues of $7.23 billion, a 19.2-percent increase on a continuing operations basis compared to the third quarter of 1997.
Revenues on a continuing operations basis exclude those from Advanced Technology Systems, which Lucent sold, and from its Consumer Products business, which became part of a joint venture with Philips Electronics N.V. in October 1997.
The Yurie and Optimay acquisitions were charged to Lucent’s research and development budget. Lucent devotes 10 percent of its revenues to R&D, including 1 percent to pure research, said John T. Dickson, president of Lucent’s Microelectronics Group.
Lucent is granted an average of 3.5 patents “every working day” compared with one per working day a year ago, said Dan Stanzione, chief operating officer of Lucent.
“We introduced a complete silicon/software design package for GSM handsets just three months after acquiring Optimay, a leading GSM software development house,” Stanzione said.
“It’s not been a good year for the [semiconductor] industry in general, especially vis-a-vis the [personal computer] business, but we focus on the communications aspects. If the [total chip] industry grows at 3 (percent) to 4 percent in 1998, we’ll grow at twice that rate.”
Wireless telecommunications is a “critical area” for Lucent, which has been awarded $2.5 billion in mobility contracts worldwide, double the market growth rate during the past year, Stanzione added.
Overall, in wireless and wireline telecommunications, Lucent has announced $9 billion worth of new contracts in the past year and has received an equal amount of business in contracts not yet announced, he said. Half of all these new contracts come from new carriers and a third are from outside the United States, said Carly Fiorina, group president of Lucent’s global service provider business.
“We were late getting into GSM, but we have overhauled the line and doubled revenues despite strong competition from Ericsson and Nokia,” Stanzione said.
“We are strengthening our position in [Code Division Multiple Access] and believe we have global leadership.”
By 2000, there will be 1,000 new telecommunications carriers, Fiorina said, adding, “We don’t believe the entire communications industry will be characterized by four-to-five companies.
“There are certain consolidators that will be global in scale, but there also will be a lot of regional operators that will continue and prosper.”
Within 20 years, it is projected the number of phone lines will double to 1.4 billion and the number of wireless subscribers will zoom to 900 million from 200 million, Stanzione said. And despite economic turmoil in some key regions of the world today, pent-up demand for telecommunications services remains strong.
“We are not planning for a downturn in demand (this year), and we don’t think there will be. There will be shifts to newer players away from large service providers,” he said.
“We have only been operating outside the United States for 10 years, but our competitors, like Alcatel and Siemens, have much more exposure abroad…And in Asia-Pacific, Latin America, Russia, Europe, we are taking (market) share.”
Defining market share is an imprecise exercise, Fiorina said, because competition is taking place “in a new space, in new network elements.”
However, she added, “we think we are taking share from [Northern Telecom Ltd.], Motorola and, in some markets, Alcatel.”
