Telecom-gear spending seems to have dried up last month, sinking sales hopes at Lucent (LU) and perhaps its rivals as well.
The Murray Hill, N.J., equipment maker
posted a 16% sequential decline in sales for its fiscal first quarter ended in December. Lucent said it missed out on the annual "budget flush" order spree in which big telco customers spend unused funds.
"We really didn't see any budget flush anywhere and certainly not in the U.S.," said Lucent CEO Pat Russo on a conference call with analysts. "We just flat out didn't see it."
Lucent is the first big old-line telecom supplier to report earnings this season. Industry observers say there is reason to believe other networking players could find themselves high and dry after budget-flush season, though.
, for example, came up light Tuesday on sales in the most recent quarter. On a conference call with analysts, the company said it didn't see a budget flush, though execs added that they typically don't count on a rash of ordering at the close of the year.
Probably the leading candidate for the year-end spending squeeze is
, which shares many of the same customers that Lucent sells to, say analysts.
is such a big piece of Lucent's sales, they have to be in the center of it all," says Sanford Bernstein analyst Paul Sagawa.
could also be issues," says Sagawa, who has a sell rating on Nortel and a buy on Lucent. "If so, Nortel will be in even bigger trouble."
Nortel has not announced a reporting date for its fourth- quarter earnings yet. Sanford Bernstein does business with both Nortel and Lucent.
Adtran shares fell $4.42, or 14%, to $27.01, while Nortel was down 4 cents to $2.94; Lucent dropped a penny to $2.49 in midday trading Tuesday.