It took a while, but

Lucent

(LU)

finally joined its telecom industry peers in predicting another quarter of financial despair.

Citing "continuing market softness and ongoing uncertainty in customer spending levels," the company offered its first

guidance for the fiscal fourth quarter ending this month. And as some Wall Streeters had warned

in

TheStreet.com

, the company's long-awaited words were anything but soothing.

Lucent predicted a fourth-quarter pro forma loss of 45 cents a share, nearly tripling the 16-cent Wall Street consensus loss forecast. The company says revenue will plunge 20% to 25% from third-quarter levels to around $2.3 billion, again well below the $2.86 billion analyst estimate. Lucent fell 19 cents to $1.46 in midday trading Friday.

Desperately trying to stay on track to make money as promised next year, Lucent also said it would further trim its quarterly revenue break-even point to $2.5 billion to $3 billion. The company said it would update investors next month on its cost-cutting progress, but analysts say it seems increasingly likely Lucent will have to further slash its already scaled-back offerings and workforce.

"They need to get to a size that the industry is telling it it should be," says Tom Lauria, a financial consultant with Avtera and a former Lucent investor relations manager.

Sliding

Ever since the Internet bubble burst, Lucent and its big rivals have been furiously trying to reverse their massive expansion plans and head back to profitability. The two most visible expressions of this shift have been a torrent of layoffs and the publication of quarterly revenue break-even targets, estimating the smallest top-line figure a company can reach without running red ink.

Lucent has already set plans to cut its staff to 45,000 workers by year-end, barely a third of its peak level, and its oft-revised breakeven target was last seen before Friday at somewhere below $3.5 billion.

In a

story last month,

TheStreet.com

cited insiders familiar with the company's long-range plans who said there will be cuts to poorly performing product lines and further reductions of jobs to allow Lucent to turn a profit on annual revenue of $10 billion. The staff cuts are expected to bring the company's total head count to 35,000 employees sometime next year.

Lucent's press relations corps continues to call such projections "ludicrous speculation." But as observers point out, weak current-quarter revenue projections and the stagnant sales trend suggest the company will have to look elsewhere to pick up the break-even slack.

Details, Details

Analysts say the severity of the sales shortfall -- roughly $700 million below the previous quarter and less than half of the year-ago period -- deals a mean blow to the company's two-year-long recovery process. Finding sales steeply lower than the stabilization they were hoping for, Lucent now has little leeway in terms of cuts, say analysts.

Lucent offered little by way of detail on the financial front, and did not schedule a conference call with investors to answer questions. Some analysts said management was "bewildered" over the continued freefall in sales.

Of course, on that front Lucent isn't alone. Network gearmaking rivals

Ciena

,

Nortel

and

Tellabs

have all slashed sales projections as demand dries up. And each outfit has cut its staff size by half or more to try and stem losses.

The magnitude of Lucent's shortfall also disloged one of the company's strongest fans on Wall Street. Lehman Brothers analyst Steve Levy was one of the last remaining Lucent bulls, but even his optimism was shaken by the size and nature of Lucent's latest warning. Citing a new weakness in Lucent's one pillar of strength -- wireless equipment sales -- Levy lowered his rating to neutral from buy Friday.

"Lucent's differentiation relative to other companies in the industry has pretty much vanished," Levy wrote in a report to clients Friday.

Lending a Hand

The spending freeze among big-telco customers isn't the only problem for outfits like Lucent. Among the items Lucent pointed to in its press release Friday was the default of a customer Lucent lent to. Analysts say

Leap Wireless

(LWIN)

stopped payment on a loan Lucent made to the troubled small-city wireless telco. A Leap Wireless spokeswoman declined to comment.

Lucent frequently lent customers money to buy its gear and racked up loan commitments in excess of $7 billion during the market's peak in 2000. Lucent originally committed $1.3 billion in financing to Leap, but those terms were revised in March.

Lucent declined to comment on the deadbeat customer. Another big boom-era lender, rival Nortel, said it wasn't significantly exposed to Leap at this point.

"While we do not specifically comment on our customers' finances, we are aware of the current situation with Leap," said company spokesman David Chamberlin. "We value them as a customer and have been working with them on their business plans, as they are refined. We do not have a material exposure."