Lucent Warns on Sales

The bull case on Lucent(LU) took a hit Friday when the telecom-equipment supplier lowered revenue guidance for its first quarter and full year.

The Murray Hill, N.J., company expects to report revenue of $2.05 billion in the first quarter ended Dec. 31. Analysts surveyed by Thomson First Call were forecasting revenue of $2.44 billion in the quarter. The company had revenue of $2.43 billion in the fourth quarter ended September 2005.

"The sequential decline is primarily driven by lower sales in the United States and China," Lucent said.

Lucent shares fell 18 cents, or 6.6%, to $2.53 early Friday.

While Lucent expects revenue in the second half of the fiscal year ending in September to be "significantly higher" than revenue in the first half, it also lowered its full-year sales guidance. The company now sees fiscal 2006 revenue that is unchanged or up in the low-single digits from 2005; it previously saw a gain in the mid-single digits.

Lucent had revenue of $9.44 billion in the year ended September 2005. The Thomson First Call forecast for fiscal 2006 revenue is $9.96 billion.

"As a result of the first-quarter performance and a review of our expectations for the remainder of the year, we believe it is prudent to change our full-year revenue guidance at this time," Lucent said. "While we are clearly disappointed, we consider this to be a temporary setback to the progress we have made, and we are confident that our performance will be much stronger for the remainder of the year.

"Our customers continue investing in the next generation of networks that will be based on IMS, and despite this quarter's results, we continue to see opportunities in the market that align with our strengths and investments in IMS, 3G mobile, services, next-gen optical and access. As always, we will continue to look at ways to profitably grow the top line, broaden our customer base and improve our cost structure," the company said.

Lucent also said Frank D'Amelio, its chief financial officer, will become chief operating officer. D'Amelio will remain CFO until a successor is named.

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