Lucent Technologies Inc. the
world's largest maker of telecommunications equipment on
Thursday reported better-than-expected first quarter profits,
buoyed by strong demand for data networking equipment and
improving foreign sales.
Lucent, which last week agreed to buy data networking
company Ascend Communications Inc., also said it was optimistic
about its prospects for its fiscal year ending in September. It
expects earnings per share for the year to increase about 35
percent on revenue growth of about 19 percent to 20 percent.
In the first quarter ending December 1998, Lucent's profit
increased to $2.7 billion or $2.00 a share, compared with $792
million, or 61 cents a share a year ago.
Excluding one-time gains and charges, first quarter profit
rose 26 percent to a record $1.414 billion or $1.05 a share. The
results beat Wall Street earnings expectations of $1.01 a share,
according to First Call, which tracks analysts' estimates.
Lucent, based in Murray Hill, N.J., has topped earnings
expectations every quarter since it was spun off from AT&T; Corp.
"Lucent begins fiscal 1999 with a solid quarter, with
record earnings and margins," said Lucent Chairman Richard
McGinn. "As our customers continue to evolve and transform
their networks for next-generation broadband communications and
we add new customers around the world, Lucent's momentum has
never been stronger," he said.
The unit's revenues outside the United States increased a
record 67 percent and represented about 42 percent of the
group's revenues for the quarter. Within the United States,
revenues decreased 19 percent from the year-ago quarter due, in
part, to the delay of revenues into the second quarter.
First quarter revenues for systems for communications
network operators increased by 3 percent to a record $6.1
billion, driven by sales of switching systems with associated
software, and optical and data networking systems.
The current first quarter profits included a $1.3 billion
gain due to changes in accounting for its pension and
post-retirement benefits, and a $14 million acquisition-related
charges. The year-ago quarter included an acquisition-related
charge and a gain on the sale of a unit.
Lucent's first quarter quarterly revenue grew only 6
percent to $9.2 billion from $8.7 billion, as some revenue it
had expected to record at the end of the first quarter was
delayed into the second quarter.
In its business communications unit, revenues increased 2
percent to $1.975 billion. The microelectronics units' revenues
increased 6 percent over the year-ago quarter to $821 million,
driven by sales of chips for high-speed communications, mass
storage and data networking. Lucent's core semiconductor
business grew 18 percent.
As a percentage of revenue, gross profit margin for the
quarter improved to 52.3 percent from 48.2 percent in the
year-ago quarter, reflecting a more favorable mix of products
software, optical and data networking as well as the
improved performance of multi-year contracts.
Selling, general and administrative expenses (SG&A;)
accounted for 19.3 percent of revenues in the quarter, up from
17.8 percent in the period a year-ago.
With strong customer demand, plus the revenues that were
delayed, Lucent said it expects its second quarter revenues to
increase about 30 percent from the year-ago quarter, and
earnings per share to double from the 14 cents reported a year