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Lucent Drops to 2-Year Low on Profit Warning

October 11, 2000|From Associated Press

NEW YORK — Shares of Lucent Technologies plunged to a two-year low Tuesday after the beleaguered producer of telecommunications equipment warned for the third time this year that profit won't meet steadily declining expectations.

Crushing hopes for a speedy turnaround by the former Wall Street darling, Lucent disclosed after major stock markets closed that earnings for the quarter ended Sept. 30 will be below the company's previous forecasts to Wall Street analysts.

The company also warned that the weak showing has prompted the company to lower its expectations for the new fiscal year that began Oct. 1.

Lucent now expects to report a profit from continuing operations of 17 to 18 cents a share for the just-ended quarter, down from 24 cents in the same period last year and 10 cents below recent forecasts of industry analysts surveyed by First Call/Thomson Financial.

Lucent's stock, which had already lost nearly two-thirds of its value since late 1999, plunged even further in after-hours trading. The stock slid below $25 after closing at $31.38, off 94 cents, on the New York Stock Exchange.

The discouraging revision to the company's outlook was the third since early January, when Lucent first disclosed problems in the growth of its business despite soaring demand for the network equipment being used to expand the Internet.

The stream of disappointments, which has severely tarnished Lucent's credibility among Wall Street analysts, comes in stark contrast to the robust business reported by top rivals such as Nortel Networks.

During a conference call after the warning, company officials tried to reassure a skeptical audience of industry analysts.

"Our problems have been identified and they are very fixable," said Deborah C. Hopkins, Lucent's chief financial officer. Despite this year's stumbles, she said, "I believe we are sitting on a gold mine."

Lucent, based in Murray Hill, N.J., blamed part of the latest profit shortfall on weak revenue and profit margins in its optical systems business.

The company also said its results were hurt by a faster-than-expected drop in sales of circuit-switching gear for telephone networks and the need to set aside more cash reserves for possible bad loans to smaller customers.

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Another Fall

Stock in Lucent Technologies has lost nearly two-thirds of its value since late last year as the company struggles with weak revenue and margins. The shares fell to $25 in after-hours trading on the company's third earnings warning this year.

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Lucent shares, monthly closes and latest on NYSE

Tuesday: $25.00 (after-hours quote)

Source: Bloomberg News

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