Lucent Technologies Inc., the
world's largest telecommunications equipment maker, expects its
revenue and profit to continue growing strongly and sees more
acquisitions in areas of wireless and data networking.
"Taking (market) share and growing substantially the top
line would put us in the mid-$40 billion dollar range for
(revenues) next year," Lucent Chairman Rich McGinn told Reuters
on Monday in an interview at the Telecom 99 trade show in
Lucent expects its revenues in 2000 to grow about three to
five percentage points above the average market growth rate of
14 percent to 15 percent.
It was also comfortable with Wall Street's consensus earnings
estimates. According to research firm First Call, analysts
expect Lucent to earn $1.20 a share in 1999 and $1.51 a share in
In the third quarter ended June 30 1999, revenues was $9.32
billion, a rise of 22 percent over the previous third quarter.
Lucent has been working aggressively to shift from its past
focus on telephone equipment to the new, converging markets for
voice, data and video communications. It will continue to grow
through acquisitions, as well as through its own sales and
research and development efforts, McGinn said.
"We are boringly consistent here we are very much focused
on both organic growth through R&D; (research and development)
and (sales) channels, as well as in acquiring very talented
people, emerging technologies and some market positions," he
Lucent expects to spend about 11 percent to 12 percent of its
revenues on research and development in 2000.
Future Acquisitions in Fast Growing Segments
Future acquisitions will focus on fast-growing segments of
the market, such as wireless, data networking, optical, software
and software-based switching and semiconductors, McGinn said.
Lucent's wireless business is already growing at a very fast
rate more than 20 percent and is now among the company's
largest businesses, McGinn said. Lucent has announced over $1
billion in wireless contracts in the past 10 days.
The wireless business could see even more growth if China
embraces CDMA (Code Division Multiple Access) wireless
technology, in addition to the GSM (Global Standard for Mobile
Communication) standard, McGinn said.
"They (China) have given indications but not solidified that
position at this time. If and when that might happen, it would
be another spurt of growth for us," he said. Lucent is among
the leaders in providing CDMA equipment.
Microelectronics or semiconductors is another fast-growing
unit as Lucent targets the more lucrative, communications
segment of the chip industry. The unit historically has grown at
about 20 percent a year and that growth rate is expected to
continue, McGinn said.
Internationally, Lucent continues to see strong demand and to
gain market share. It has seen strong growth in Brazil and
throughout Latin America, as well as in Asia. International
sales comprise about 27 percent of Lucent's total revenues.
"We are so under-represented outside the United States that
while some of our competitors might be seeing flat market
situations for themselves, what we're seeing that with every new
customer and new order, it's an upside for us," McGinn said.
Some Units Need Improvements
The enterprise unit which sells communications equipment to
large corporations increased sales only about four percent in
the third quarter and continues to lag behind other
Sales of PBX (private branch exchange) systems and equipment
sales to small businesses remain slow, but corporate areas, such
as sales of call centers and messaging services, have been
growing very fast, McGinn said.
"We expect to extend our lead in call centers and
messaging.to raise the profile and growth of that business,"
In August, Lucent canceled an agreement to sell its
U.S.-based sales group that targets small and mid-sized
businesses because it could not agree on terms with the buyer.
Since then, Lucent has continued to look at alternatives for
"We're seriously looking at other alternatives. I would expect
a resolution would occur in the near future. We will either
decide that the productivity of that business has improved and
has the potential to keep improving or that we will be working
on an agreement with another firm," he said.
McGinn also said he remains dissatisfied with the growth of
Lucent's Systimax operations, which provide cabling systems for