Lucent Slashes Guidance

Lucent (LU) tumbled 6% late Monday after the telecom-equipment giant slashed fiscal third-quarter guidance, citing a slowdown in wireless sales.

The Murray Hill, N.J., company also said its merger with Alcatel (ALA) is on track to close by the end of the year and that the companies should be able to meet their ambitious cost-cutting goals.

But shares fell 12 cents in late action to $2.22 after Lucent said it expects to make 2 cents a share for the quarter ended last month on revenue of $2.04 billion. The company made 7 cents a share on revenue of $2.34 billion last year, and analysts surveyed by Thomson Financial were looking for a 4-cent profit on sales of $2.34 billion.

"During the third quarter, our North American mobility business was adversely impacted by a slowdown in spending on some of our current-generation wireless solutions," said CEO Patricia Russo. "However, we are beginning to see some of our customers move toward the next phase of mobile high-speed data. And in fact, we recently announced contracts with Verizon Wireless and Telecom New Zealand for our EV-DO RevA solution, which we expect to make commercially available in late September."

The company also claimed it would show stronger results in the fourth quarter, when analysts expect it to make a nickel a share on revenue of $2.56 billion.

"We expect that mobility deployments in North America will enable us to make the fourth quarter our highest quarterly revenue period for fiscal year 2006 by a significant margin," said operating chief Frank D'Amelio.

Lucent and Alcatel said their preintegration work was on track. "From R&D to sales, from product development to marketing, from finance to talent development, we are committed to being a role model company for the 21st century," Russo said.

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