Lucent continues quarterly profit streak

Lucent Technologies reported strong year-over-year revenue and income growth for its fiscal third-quarter on 21 July, saying it...

Lucent Technologies reported strong year-on-year revenue and income growth for its fiscal third-quarter on 21 July, saying it benefited from increased demand for voice over internet protocol (VoIP) and high-speed data and broadband access.

The company also predicted that it would report a full year of profitability for 2004 when it releases the results in October, citing a market stabilisation.

The telecommunications equipment and services company reported revenue of $2.19bn (£1.88bn), an increase of 11% from the $1.96bn reported a year ago. Revenue for the quarter ended 30 June was essentially flat from the $2.19bn earned in the previous quarter.

Net income came in at $387m compared with a net loss of $254m during the same period a year ago. It was the company's fourth consecutive quarterly profit.

Analysts predicted earnings revenue of $2.2bn for Lucent's third-quarter.

The company also made solid gains when compared to its second quarter income of $68m. However, Lucent said third-quarter earnings per share results benefited from certain items, such as bad debt and financing recoveries, which boosted earnings.

The company saw progress in areas such as VoIP, high-speed data and third-generation wireless access, said Lucent chairman and chief executive Patricia Russo. Additionally, the company sewed up 35 customer wins during the quarter and tapped into new international markets, Russo said.

"We are seeing more significant, multi-year plans being developed for next-generation networks," Russo said.

Russo cited new customers for its Accelerate VoIP portfolio, for example, including a three-year agreement with BellSouth, and a deal with KPY Networks in Finland, both won during the quarter.

To help further strengthen its position in the area, the company also announced in its third quarter that it was buying IP-gateway product provider Telica, which is set to close in the company's fiscal fourth-quarter.

Continued global expansion was also listed as contributing to the strong quarter. The company reported revenue from outside the US increased 3% over last year to $785m, while revenue from the US increased 17% to $1.4bn. Russo highlighted mobile technology deals won in Vietnam and Pakistan during the quarter, saying they were firsts.

Mobile technology continues to be a strong business sector for the company, as its Mobility Solutions group reported a 58% increase in revenue over last year, to $986m.

"We have seen good strength in the mobility market as customers grow their networks to serve more subscribers and build out 3G services," Russo said.  Lucent announced 3G network deployments with a handful of customers during the quarter, including China United Telecommunications and US Cellular.

And last week Lucent announced a $5bn deal with Verizon Wireless to provide networking equipment, software and services, which underscores the company's progress in the 3G wireless business, Russo said.

He emphasised that Lucent is investing in both fixed and wireless offerings, however, in expectation of an increasingly converged market.

"We are clearly seeing an interest in converged services, regardless of the access," Russo said.

While the company is investing in several areas, it reported that as of 30 June, it held $4.7bn in cash and marketable securities, and a slightly-reduced headcount of 32,300.

The company predicted that it would post an annual revenue percent increase for fiscal 2004 in the mid-single digits. 

Analysts predict the company will report a revenue increase of 5% for 2004, to $8.9bn. In the fourth quarter, it is expected report sales of $2.28bn.

Lucent is not the only telecommunications player predicting a market bounce-back. Ericsson also reported strong quarter results, posting an 18% increase in sales for its second quarter as carriers moved to upgrade their networks. Both equipment providers are predicting that service-hungry consumers will continue to drive their businesses.

Scarlet Pruitt writes for IDG News Service

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