Lucent Technologies expects its Q4 revenues to be around 20-25% lower than the $2.95 billion recorded in Q3. The company blamed continuing market softness and ongoing uncertainty in customer spending levels for the decline. Analysts now expect the company to undertake another round of job cuts, and reduce its headcount to around 30,000 as it seeks to cut its costs in relation to revenues.
Lucent expects to post a loss per share in the fourth fiscal quarter of approximately 45 cents, primarily as a result of the sequential revenue decline, charges associated with a significant customer financing default this month, and the inability to recognize tax benefits on losses. The company had not previously provided guidance for the fourth fiscal quarter of 2002 due to ongoing market uncertainty.
Last quarter, the company posted a pro forma loss of $1.88 per share from continuing operations. Excluding the impact of a non-cash charge of $1.72 per share to increase the valuation allowance on deferred tax assets, the pro forma loss per share (assuming a tax benefit for the quarter) would have been a loss of 16 cents. On a pre tax basis, the pro forma loss per share would have been 24 cents.
The company stated that, given the anticipated results for the quarter, it expects to meet the financial covenants of its existing credit facility. The company noted that it has no outstanding balance on this credit facility.
In addition, the company said today that it is also actively developing plans to reduce its quarterly EPS breakeven revenue to a range of $2.5 billion to $3.0 billion. With these additional restructuring actions, the company continues to work toward a return to profitability by the end of fiscal 2003. Lucent will provide an update on its new quarterly EPS breakeven revenue figure and its impact on the company’s headcount at its October 23 earnings announcement.