Lucent Warns of Lower Q3 Revenue, Profit

Lucent Technologies expects to report declines in revenue and profit for its fiscal third quarter that ended June 30, the company said Monday.

The Murray Hill, N.J., networking equipment company expects to report revenue of US$2.04 billion, compared with $2.14 billion in the previous quarter and $2.34 billion in last year’s fiscal third quarter. It blamed the drop on lower sales in North America and, to a lesser degree, in China.

Lucent expects to post earnings of $0.02 per share for the quarter, compared with $0.04 per share in the previous quarter and $0.07 per share in last year’s third quarter. The year-earlier profit had a positive impact of about $0.02 per share from special items, Lucent said. The company plans to announce its third-quarter results on July 26.

Also Monday, Lucent and Alcatel said they are on track to complete their merger by the end of this year and have sketched out the organization of the combined company.

The duo, which together could have annual revenue of US$25 billion based on last year’s combined totals, agreed to merge in April. The planned move reflects a trend toward consolidation in both telecommunications service providers and the equipment vendors that supply them.

The deal should receive all regulatory and shareholder approvals by the end of this year, the companies said. They expect to file a voluntary notice of the transaction to the Committee on Foreign Investment in the United States, which reviews mergers and acquisitions involving U.S. and foreign entities.

The as-yet-unnamed company would be divided into three business units focused on carrier products, enterprise products and services. The carrier business groups unit will be headed by Etienne Fouques, currently an executive vice president of Alcatel. It will have three subdivisions. The wireless segment will be led by Mary Chan, who has been an executive in Lucent’s mobile division. A wireline group will be headed by Michel Rahier, who has headed Alcatel’s fixed communications group. A convergence division will be led by Marc Rouanne, an Alcatel mobile executive.

Hubert de Pesquidoux, an Alcatel executive vice president and head of Alcatel North America, will lead the enterprise business group. John Meyer, president of global sales and services at Lucent, will direct the service business group.

As announced earlier, Lucent Chairman and Chief Executive Officer (CEO) Pat Russo will be CEO of the company. Serge Tchuruk, currently chairman and CEO of Alcatel, will be its non-executive chairman.

Geographically, the company will have four regions. North America will cover the United States, Canada and the Caribbean. Asia-Pacific will include China, Northeast Asia, Southeast Asia and Australia.

The regional plans would split Europe in two parts. Europe and North will include the United Kingdom, Germany, Russia, and countries in Scandinavia, Eastern Europe and Belgium, the Netherlands and Luxembourg. Europe and South will cover France and southern Europe as well as Africa, the Middle East, India and Latin America.

The companies are still confident they will save 1.4 billion euros (US$1.7 billion) per year before taxes, the update said. About 55 percent of those savings will come from cutting approximately 9,000 jobs worldwide.

-Stephen Lawson, IDG News Service (San Francisco Bureau)

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