Lucent Technologies, Inc., the struggling telecommunications equipment maker, revised its quarterly revenue projections downward on Tuesday, and said that its going to take longer than expected to return to profitability.
After initially projecting growth in revenue of 10 to 15 percent for the companys fiscal second quarter just weeks ago, the Murray Hill, N.J. company revised its projections Tuesday and said growth will only see a "modest-to-10-percent improvement." Once again, the culprit is the ongoing slowdown in spending by telecommunications service providers.
While noting a continuing sequential improvement in the companys bottom line, Lucent executive vice president and chief financial officer Frank DAmelio noted in a prepared statement that large service providers "continue to reduce or defer their spending as they rethink their business plans and conserve cash, which is having an impact on our top line."
According to a spokesperson for Lucent, the revised revenue projections are not the result of any losses of business to competitors.
DAmelio noted that Lucents return to profitability will likely be deferred until 2003.
The economic downturn will also impair Lucents ability to spin off its chip making division Agere Systems, Inc. Lucents EBITDA (earnings before interest, taxes, depreciation and amortization) do not yet meet the conditions laid out in the companys credit facility to complete the sale. Lucent officials said they believe the third quarter will meet those conditions.
Lucent also announced that it is considering raising additional capital to strengthen its balance sheet and provide more liquidity. That would likely come in the form of a convertible offering, company officials said.
Additionally, Lucent said it would take a charge of 6 cents per share this quarter because of changes in federal tax law affecting tax refunds for operating losses. While the changes are favorable to Lucent in the long-term, according to company officials, certain valuation allowances for foreign tax credits are "more likely than not to expire unused." Lucent will provide full details for its fiscal second quarter on April 22, 2002.