Lucent Hits Quarter, Combines Units

The head of the highflying wireless unit will take over the combined network services business.
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Lucent

(LU)

posted a solid fiscal second quarter Tuesday and shook up its organizational chart.

For its second quarter ended last month, the Murray Hill, N.J., telecom gearmaker earned $282 million, or 6 cents a share, up from the year-ago $68 million, or 2 cents a share. Revenue rose 6% from a year ago to $2.34 billion.

The latest quarter benefited from an income tax gain of 2 cents a share, while the year-ago period was hurt by a penny a share on the same issue. Excluding those items, latest-quarter numbers were in line with Wall Street's expectations: Analysts surveyed by Thomson First Call had forecast earnings of 4 cents a share on revenue of $2.31 billion.

Lucent reaffirmed its 2005 guidance, which calls for revenue growth in the mid-single digits percentagewise.

Lucent also said it would combine its mobility and wireline businesses in an effort to simplify its operations and drive down costs. The company named Cindy Christy, who had run the mobility group, to head the combined unit, which will be known as network solutions. Wireline chief Janet Davidson will become head of corporate strategy, and Jeong Kim will rejoin Lucent as president of Bell Labs. Lucent said Bill O'Shea, previously head of Bell Labs, will retire.

Lucent said the move would allow it to further trim its cost structure, but the company didn't detail any layoffs or plant closings. The decision comes on the heels of a strong performance for Lucent's wireless product team, which won contracts at several top U.S. cell-phone carriers in recent months. Meanwhile, the phone switch business has turned into a bit of an albatross at the company as big telcos shun spending on old-line gear.

The news comes as investors in the tech sector fret over a possible spending slowdown by big companies. Two of Lucent's smaller rivals,

Foundry

(FDRY)

and

Extreme

(EXTR) - Get Report

, warned last week of softer-than-expected quarterly sales. Tech titan

IBM

(IBM) - Get Report

only heightened Wall Street's jitters by posting its own earnings shortfall on Thursday.

Meanwhile, investors continue to look for a wave of consolidation to sweep through the crowded ranks of the telecom suppliers, but some observers say any big pairings are probably still

a year away.

Lucent closed Monday at $2.34.