Lucent wireless equipment sales wane

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Lucent Technologies, the US telecoms equipment group that is being acquired by Alcatel, on Wednesday said lower sales of wireless network equipment in North America had hit quarterly results.

Net income in the third quarter fell sharply to $79m, or 2 cents per diluted share, from $372m, or 7 cents a share, the year before. Last year’s results were boosted by $127m in gains due to the favourable impact of tax items and recovery of bad debt.

Revenue fell to $2.05bn from $2.34bn a year earlier, reflecting contract delays, particularly in China, which has yet to decide on a 3G standard.

Lucent rejected suggestions that the market for equipment based on CDMA (code division multiple access) technology was waning. Lucent is the leading supplier of equipment for CDMA wireless networks, used by carriers including Verizon Wireless and Sprint Nextel in the US.

Patricia Russo, Lucent’s chief executive who will become the Paris-based chief executive of the combined company, acknowleged that Lucent had faced a succession of tough challenges. “While these results were clearly disappointing, we do not believe these results are indicative of the longer-term opportunities we see in the global mobility market,” she said.

“CDMA continues to represent a large, sustainable market, and we see significant growth in the UMTS [universal mobile telecoms system] market as our customers enable their networks to deliver the exciting new applications their customers are demanding.”

In spite of the falling revenues and a less favourable product and geographic mix, Lucent still managed to report gross margins of 41 per cent.

“Looking ahead and assuming that our roll-outs remain on track, we expect that mobility deployments in North America will enable us to make the fourth quarter our highest quarterly revenue period for fiscal year 2006 by a significant margin,” said John Kritzmacher, chief financial officer.

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