• United States
Managing Editor

Lucent lowers annual revenue forecast

Jan 19, 20062 mins
IT LeadershipServers

* Lucent appints a COO to help improve the company's business

Lucent is lowering its annual revenue forecast for 2006 due to weak sales in the U.S. and China.

Lucent had expected 2006 revenue to grow in the mid-single digits on a percentage basis, but it now expects full-year revenue to be flat from 2005 or to increase only slightly.

Revenue for the first quarter, which ended Dec. 31, will likely come in at $2.05 billion, down from $2.43 billion in the prior quarter, ended Sept. 30, 2005.

Analysts had been expecting first-quarter revenue of $2.44 billion and a profit of 4 cents per share, according to a consensus estimate from Thomson First Call.

For the full year analysts expect revenue of $9.96 billion and earnings of 17 cents per share, Thomson said.

The company is due to report its financial results Jan. 24.

Lucent blamed the first-quarter decline primarily on lower sales in the U.S. and China. It expects revenue in the second half of the fiscal year to be significantly higher than in the first half.

Analysts say the culprit is wireless.

“We believe the topline miss is primarily due to weakness in (Lucent’s) Mobility (products) in both U.S. & China,” states UBS Warburg in a research report. “In the U.S., potential cutbacks in Verizon capex as well as decline in EV-DO sales were likely the cause of weakness, while Chinese carriers waiting for 3G buildouts in 2006 along with a possible slowdown in CDMA net adds at China Unicom were the cause in China.”

Nearly 24% of Lucent’s total fiscal 2005 sales were derived from Verizon Wireless, UBS states.

Investment firm CIBC World Markets also cites lower CDMA sales into Verizon and also Sprint Nextel for softness in the U.S. In China, China Unicom is spending less on CDMA as it waits fro 3G, CIBC Analyst Steve Kamman states in a research report.

The revenue setback is temporary, and performance will be stronger for the remainder of the year, Lucent said in a statement.

Lucent also said its CFO, Frank D’Amelio, will move into a new position as COO to help improve the company’s business. He’ll continue as CFO until a successor is named.

The company did not previously have a COO.

As COO, Amelio, will oversee Lucent’s sales, product groups, services business, supply chain, IT operations and labor relations.

Managing Editor

Jim Duffy has been covering technology for over 28 years, 23 at Network World. He covers enterprise networking infrastructure, including routers and switches. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy and at

More from this author