LUCENT to cut up to 20,000 more jobs, posts larger-than-expected $3.25 billion loss
Tuesday, July 24th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Lucent Technologies Inc. plans to cut another 15,000 to 20,000 jobs from its payroll and is eliminating its dividend in a bid to return to profitability.
The announcement Tuesday came as the embattled telecommunications maker posted a fiscal third-quarter loss of $3.25 billion, far wider than expectations.
Separately, Lucent said it had reached an agreement to sell its fiber-optics operations to Furukawa Electric Co. and Corning Inc. for a total of $2.75 billion, part of two separate deals it announced Tuesday.
Lucent also said it was eliminating its 2 cent quarterly dividend beginning Sept. 1, in a move the company said would free up $68 million per quarter.
In another move, Lucent has entered into a manufacturing contract with Celestica Inc., a Canadian telecommunications and computer equipment manufacturer, for Lucent's plants in Oklahoma City and Columbus, Ohio, Lucent spokeswoman Mary Ward said.
Ward said Lucent is selling its manufacturing assets at Columbus to Celestica and will lease its Oklahoma City plant to the company. Lucent has signed a five-year supply agreement under which Celestica will make switching, access and wireless networking systems products for Lucent.
``Lucent is going to retain ownership of the Oklahoma plant,'' Ward said.
The news sent Lucent's shares down $1.34, or nearly 17 percent, to $6.56 in midday trading Tuesday on the New York Stock Exchange. Shares of Lucent, which was once part of AT&T Corp. and is one of the most widely held stocks on Wall Street, have now plummeted more than 50 percent since the start of the year.
Since late 1999, Lucent has experienced slumping sales as it lost business to competitors that brought faster, new telecommunications gear to market quicker. The national economic slowdown has added to Lucent's problems, as many customers have cut back on spending and others who owe the company for equipment have filed for bankruptcy.
Lucent has responded by slashing jobs and selling off parts of the company. When this next round is complete, the massive restructuring will leave a streamlined Lucent with less than half of the payroll it had at the beginning of the year.
Lucent has already cut its work force by 19,000 jobs since January, leaving it with about 87,000 employees _ and that number doesn't include the more than 15,000 jobs that left Lucent fold when it spun off semiconductor and optical components division Agere Systems into a separate company earlier this year.
On top of the new round of planned cuts, Lucent will trim an additional 6,000 jobs with the sale of its fiber-optics operations and another 4,500 with the sale of manufacturing assets at two plants.
Analysts said they were pleased with Lucent's moves, but wished the company had been a little quicker with its cutbacks as was the case with rival Nortel Networks.
``They have to do what they are doing to get to profitability,'' said Rashad Barajakly, an analyst at Williams Capital Group in New York. ``They are building a model that is leaner. That is positive.''
Lucent will take a $7 billion to $9 billion charge in its fiscal fourth quarter to pay for the restructuring, as well as additional asset write-downs as the company streamlines its product offerings.
``I am pleased with the progress we have made on all points of Phase I of our restructuring program,'' chief executive and chairman Henry Schacht said. ``However, we intend to go deeper with a new phase of our restructuring to reshape Lucent for future growth and profitability even more quickly.''
But Schacht and other executives said during a conference call with investors, analysts and the media. that much of the next phase of its restructuring plan hinges on the company's ability to amend the conditions of certain loan agreements with its banks.
Such discussions over its covenants are also expected to delay for up to six months the sale of its remaining stake in Agere. Lucent said Tuesday that it is now exploring a possible secondary public stock offering in order to give Agere complete independence.
For the three months ended June 30, Lucent lost 95 cents per share, compared with a net loss of $301 million, or 9 cents share, in the year-ago quarter, the Murray Hill, N.J.-based company said Tuesday.
Excluding discontinued operations, Lucent lost $1.89 billion, or 55 cents per share. Excluding other one-time items, including a $684 million restructuring charge, Lucent lost 35 cents per share.
Analysts surveyed by Thomson Financial/First Call were expecting a loss of 21 cents per share.
Revenue from continuing operations declined 21 percent to $5.82 billion compared with $7.41 billion in the year-ago quarter.
Lucent continued to make moves to streamline its operations, announcing two deals Tuesday.
Lucent will receive $2.53 billion from Furukawa for the major portion of its Optical Fiber Solutions business, while Corning will pay $225 million in cash for Lucent's interests in two joint ventures in China _ Lucent Technologies Shanghai Fiber Optic Co. Ltd. and Lucent Technologies Beijing Fiber Optic Cable Co. Ltd.