Lucent posts lower profit, but sees sales growth

NEW YORK (Reuters) - Lucent Technologies on Wednesday posted lower quarterly profit but demand for high-speed Internet and optical network equipment lifted sales.

The earnings report marked the second consecutive year of profitability for the communications network equipment maker after a downturn in the telecommunications industry. Lucent has been pushing ahead into more lucrative areas such as high-speed mobile networks and services.

Lucent chief financial officer Frank D'Amelio said in a statement that the company expects fiscal year 2006 revenue to rise on a mid-single-digit percentage basis, roughly in line with Wall Street's average expectation for a 6 percent increase, as tracked by Reuters Estimates.

The Murray Hill, New Jersey-based company said net income in the fourth quarter ended 30 September fell to US$374 million, or 8 US cents per share, compared to US$1.21 billion, or 23 US cents per share, in the same quarter a year ago.

Revenue rose 1 percent to US$2.43 billion.

"The quarter was pretty much as expected, which is solid profitability and good cash flow," said Edward Snyder, analyst with Charter Equity Research.

In the most recent quarter, Lucent recorded US$107 million in gains, or about 2 US cents a share, the bulk of which came from income tax items.

Year-ago fourth-quarter results included a US$1.0 billion gain, or 19 US cents a share, including an income tax benefit of US$861 million, or 16 US cents a share.

Lucent said it scored several potentially lucrative deals in the past weeks and throughout the quarter, including a four-year agreement announced 17 October to supply Cingular Wireless with network services.

The company has used sales of its high-speed wireless gear to offset a drop in its wireline equipment sales, though some analysts predict that wireless revenue will fall.

Wireless revenue during the fourth quarter fell 7 percent compared to the 2004 fourth quarter, though it was up 12 percent to US$4.6 billion for the full year.

Lucent must find a way to deal with industry consolidation and a possible slowdown in third-generation wireless -- or 3G -- investment, Snyder said.

"The problem with Lucent...is that there are too many suppliers and not enough customers," he said. "The customer base has consolidated and spending is starting to decline, so between those two you're not going to have enough to go around."