Lucent Stock Surges Despite Quarterly Loss

Struggling telecommunications equipment giant Lucent Technologies Inc. reported a $3.7-billion loss in its fiscal second quarter Tuesday, yet its stock surged on optimism that its long-awaited turnaround could be near.

The company, based in Murray Hill, N.J., said the pro forma loss for the quarter ended March 31, excluding restructuring charges and other one-time costs, was 37 cents a share, contrasted with a gain of 16 cents in the year-ago period.

However, Lucent’s results improved 5% from a pro forma first-quarter loss of 39 cents. The company said in January its financial results would improve each quarter through the year.

Analysts were pleasantly surprised. “You have to give Lucent credit this quarter because the restructuring progress and revenue progress is all either at or above our expectations,” J.P. Morgan H&Q; analyst Greg Geiling said.

Lucent’s shares rose $1.05, or 11%, to close at $10.25 on the New York Stock Exchange.

“We said we’d talk less and do more,” Lucent Chairman and Chief Executive Henry Schacht said after the results were announced. “We have said consistently this is a transition year, and we expect to see quarter-to-quarter improvement.”

Lucent expects third-quarter earnings to improve significantly and sales to see a modest increase.

All results excluded Lucent’s former Agere optical components unit, which was spun off recently.

Lucent Technologies Chief Financial Officer Deborah Hopkins told analysts that the company had repaid all the commercial paper held by Morgan Stanley Dean Witter & Co. Morgan Stanley now is free from the debt it acquired from Lucent as part of an agreement to provide financing while Lucent prepared the initial public offering of Agere Systems Inc.

Lucent also said losses for its loans to Winstar Communications Inc. and other write-offs totaled 15 cents a share.

Analysts on average had expected a second-quarter loss of 23 cents a share from Lucent.

Including charges and other costs, Lucent reported a second-quarter net loss of $3.7 billion, or $1.08 a diluted share, contrasted with net income of $755 million, or 23 cents a share, in the same period last year.

This year’s results included $2.7 billion in restructuring and one-time charges, as well as other costs and a loss from discontinued operations. The restructuring and other one-time charges were wider than the $1.2 billion to $1.6 billion projected in January when Lucent announced its seven-point restructuring plan.

Lucent’s second-quarter pro forma revenue fell 17% from the same period last year to $5.9 billion, but rose 36% from the first quarter as the company relied more on large service providers.

Lucent’s total net debt was cut by about $300 million from the end of December to about $3.9 billion March 31.

Lucent also has said it may sell its fiber-optic cable unit. Schacht said Lucent has received several proposals for the unit, which analysts said could raise as much as $8 billion.

Lucent said it has made 2,000 of the 10,000 job cuts it announced in January and eliminated 2,200 contractor jobs. Schacht said no additional job cuts are planned.