Lower your expectations for the first quarter of Lucent Technologies Inc.
After the market closed Thursday, the maker of telecom and networking equipment said it expects to report fiscal first-quarter earnings between 36 and 39 cents per share. First Call's survey of 33 analysts had predicted a Lucent profit of 54 cents per share for the quarter ended Dec. 31.
First-quarter revenue will be in the $9.8 billion to $9.9 billion range, or about flat year-over-year, Lucent said.
Thursday's announcement marks the second earnings warning in as many days from a large tech-related company. On Wednesday, Gateway said it would report a shortfall, although the stock still Thursday on optimism about the current quarter.
Revenue should rise 12 to 15 percent year-over-year in the fiscal second quarter, Lucent said. The company sees earnings growing 25 to 35 percent.
Lucent believes it will still grow 3 to 5 percentage points faster than the overall comunications networking market's expected annual growth of 14 percent, said Richard McGinn, Lucent chairman and CEO. "However, given the slow start for the year, we expect to be in the lower end of that range for fiscal 2000," he said.
Net income should increase 20 to 25 percent in fiscal 2000, McGinn said. Optical equipment, network access hardware and semiconductor products will boost Lucent's overall growth in the fiscal second half, the company said.
Lucent underestimated demand for its latest 80-channel DWDM optical products, especially systems capable of working with OC-192 lines. And software revenues fell from historical norms in what Lucent described as the acceleration of a recent trend toward customers buying software throughout the year rather than clustering their purchases in the December quarter.
Those factors mean Lucent will report lower-than-expected gross margins when quarterly results are released Jan. 20. New products, production adjustments and resources added in the current quarter should resolve problems, the company said.
Some Lucent customers altered their plans, delaying network deployments. Those projects should be completed sometime in the current fiscal year, Lucent said.
Shares of Lucent fell 3 3/8 to 69 in Thursday's regular trading.