Telecom-spending dominoes was the name of the game Friday as Wall Street trimmed its bets on

Lucent

(LU)

.

Analysts say the writing is on the wall: With big telco customers' across-the-board budget cuts undermining demand, summer sales numbers look dismal up and down the telecom food chain. An earnings warning would offer up only the latest setback in the company's long and arduous climb back to profitability. Lucent shares slipped 7 cents to $1.84 Friday.

Certainly the Murray Hill, N.J., telecom gear pusher can't be feeling much peer pressure to utter an all's clear. On Thursday

Tellabs

(TLAB)

became the latest Lucent rival to darken its already dim expectations. The company rolled out plans to pare its staff by 14%, citing a 20% projected sequential sales decline fueled by further cutbacks by phone company customers. Just a week earlier,

Nortel

(NT)

made similar remarks.

Fit and Trim

So now Lucent analysts are cutting their numbers on the big gearmaker too. UBS Warburg's Nikos Theodosopoulos, for one, now expects Lucent's fourth-quarter sales to fall $130 million short of his previous $2.9 billion target. Theodosopoulos also lowered his fiscal 2003 sales targets for Lucent to $12 billion, or 5% below 2002's dismal performance, according to his note Friday.

Merrill Lynch analyst Tal Liani had an even more dire take on the sales freefall, trimming his fourth-quarter revenue target by 13% to $2.6 billion. Liani now expects a 10% sequential sales decline for the quarter.

Despite the growing chorus, don't expect Lucent to rush out any comments jumping to similar conclusions, say some observers. After all, the company never provided any financial projections for the current quarter -- so even with Wall Street's consensus falling the company isn't obliged to provide any updates.

Also, while Lucent remains squarely in the path of a devastating two-year-old industrywide spending slowdown, it may be on the right side of the seasonal patterns. Sales tend to lag in July and August and jump in September. So, some analysts argue, Lucent could wait it out.

The longer Lucent waits, obviously the more accurate its financial assessment will be. With three weeks to go in its fourth quarter, Lucent has a chance of eking out a poor performance that may actually be within range of the Street's now bleaker expectations.

Deeper and Deeper

Of course, that's putting the best face on it. Lucent's fall has been so steep and prolonged that some analysts had expected that this quarter would mark the beginning of a recovery and a slow climb up. As one analyst notes, sales levels have now fallen to pre-Internet buildout levels not seen since 1996.

The company has said as recently as July that it will reach a break-even point on quarterly revenue below $3.5 billion. But company insiders have said a new break-even level of $2.5 billion is in the works as the company

prepares to cut unprofitable products and trim staff levels below the current 45,000 target. Lucent has denied such plans.

To some, that is the clearest sign yet that the industry has made progress in erasing the effects of the oversupply and excess related to the late '90s telecom bubble.