Trust us, we're getting our house in order.
Saying its long-planned turnaround is on course,
Tuesday reaffirmed its third-quarter financial targets and hinted at additional job cuts. Its shares rallied 7%, jumping 57 cents to $8.57.
During an analyst presentation at the
conference in Atlanta, Lucent CEO Henry Schacht said third-quarter losses and sales would improve from second-quarter levels despite the continuing industrywide slowdown in telecom equipment spending. Schacht said Lucent has shifted its focus toward established phone customers and away from endangered small telcos, which should bolster sales growth and ultimately lead the company back to profitability from its recent rash of red ink. In its second quarter, Lucent lost 37 cents a share on sales of $5.9 billion.
Two months into its third quarter, and a week after the
failure of its $23.5 billion merger with
, Lucent's top executive sought to paint a picture of a steadily improving company. He used the annual networking tech summit and a
flurry of new product announcements as a backdrop.
While Schacht remained upbeat, he was forced to address some challenges the company still faces: completing an eight-month-old permanent CEO search, working off a mountain of inventory and extricating itself from the
quicksand of its $6.9 billion in financing commitments as customers collapse. Meanwhile, cash remains in short supply and Lucent shares are 90% off their peak.
Of immediate concern is Lucent's
ongoing attempt to sell its fiber cable business based in Norcross, Ga., to raise some quick cash. The failure of the Alcatel merger talks, which grew out of the French telecommunications equipment maker's offer for the fiber unit, have put the sale back on the front burner. Lucent needs to raise about $2 billion to pay off short-term loans and satisfy the credit rating services. But Lucent's must-sell position, combined with a fiber production surplus, has driven the perceived value of the business down to $4 billion, say analysts, about half of what it was initially expected to fetch.
Schacht gave little by way of specifics, but said that next month he will provide more detailed financial guidance and unveil the second stage of a seven-point restructuring plan.
Among the issues he is expected to address is another round of job cuts. Schacht said the seven-point turnaround plan hasn't taken the company far enough along, and told analysts that the company would be taking some actions very soon "that should generate a favorable response." That signaled to some observers that more job cuts and asset sales could lie ahead. Lucent has set plans to trim 10,000 jobs and after those cuts take effect will employ about 90,000 people.