Lucent Technologies (Murray Hill, NJ) has just released the results of an extensive review of the company's business and financial operations, including plans to restructure the business. As a result of the review, the company expects a pro forma loss of $0.25 to $0.30 per share on continuing operations in the first fiscal quarter of 2001 ending Dec. 31, 2000. The firm will also initiate a business restructuring program to drive out in excess of $1 billion in costs as the company redesigns its internal systems and processes for long-term, sustainable growth.
Lucent has also completed the revenue review it announced in November. As a result, its fourth fiscal quarter 2000 revenue will be $8.7 billion and its pro forma earnings will be $0.10 per share on continuing operations. This is lower than the previously announced $9.4 billion in revenues and pro forma earnings of $0.18 per share on continuing operations for the quarter ended Sept. 30, 2000. For fiscal year 2000, the adjusted results will be $33.6 billion in revenue and pro forma earnings per share of $0.93 on continuing operations.
"Fiscal year 2001 will be a rebuilding year, a turnaround year for Lucent," said Lucent Technologies Chairman and CEO Henry Schacht. "We have identified the issues we must tackle, and we are undertaking a major re-tooling of the business. We are looking for a fresh start in the new year as we implement our restructuring and get our company back on track."
For the first fiscal quarter of 2001, Lucent anticipates that pro forma revenues will decline about 20% compared to the year-ago quarter, and pro forma earnings per share on continuing operations is expected to show a loss in the range of $0.25 to $0.30 per share. Reasons include a significant sales decline in North America due to an overall softening in the competitive local exchange carrier (CLEC) market, slowdown in capital spending by established service providers, lower software sales, and a more focused use of vendor financing. "We also saw an impact from expenses as a result of a cost structure that was built for a larger revenue base," said Schacht. The company will issue its actual results for the first fiscal quarter of 2001 in late January.
"We have an aggressive plan to streamline our operations, prune our product portfolio and create a significantly reduced cost structure to seize the market opportunity that is available to us. This plan will enable us to achieve improved sequential performance every quarter of 2001 and growth at or above market rates by the end of fiscal year 2002."
Lucent also is finalizing a business restructuring program that will consist of force reductions and asset writedowns related to the following issues: rationalization of various product lines, consolidation of corporate center functions, elimination of duplications in marketing functions, and streamlining of sales support functions as the company moves technical resources closer to its customers.
A review of its internal processes will continue throughout 2001 and may result in additional cost structure improvements and associated charges. Details of a restructuring charge could be announced along with first fiscal quarter results in late January. Even with this news, though, the company reportedly plans to continue to hire to "enhance its capabilities in high-growth markets."
