Strong 3G demand drives growth at Lucent

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Strong demand for 3G mobile network equipment helped Lucent Technologies report healthy third-quarter results on Tuesday, although they trailed figures for the same period a year ago because of reduced one-time gains.

Lucent, the largest US telecoms equipment vendor, said net income was $372m or 7 cents per share for the quarter ended June 30, compared with $387m or 8 cents per share the previous year.

The latest results include a gain of $127m, or about 2 cents per share, mainly due to the favourable impact of tax items and recoveries of bad debt and customer financing. For the same quarter the previous year, similar items added $211m, or about 4 cents per share.

Revenues increased 7 per cent to $2.34bn from the same period the year before, reflecting strong growth in Lucent's mobility unit where sales grew 14 per cent to $1.17bn. The growth came as carriers such as Verizon Wireless, continued to invest in 3G equipment.

“We continue to see strength in the mobile market,” said Patricia Russo, Lucent's chief executive. Lucent was also among eight companies picked as a main supplier for BT's £10bn ($17.4bn) five-year Century 21 network upgrade.

Revenues in the US increased by $118m, or 8 per cent, from the same quarter a year before, and revenues outside the US increased by $32m, or 4 per cent.

Revenue at Lucent's worldwide services business increased by 14 per cent to $538m, helping to offset a decline in networking and fixed-line equipment sales that fell by 12 per cent to $592m, reflecting the continuing decline in traditional equipment sales.

“This quarter, we continued to deliver steady, profitable results driven primarily by our strength in 3G mobile networks and growth in our services business,” said Ms Russo. Ms Russo said interest in next generation IP media subsystem technology was increasing and that Lucent was well positioned to take advantage of customer demand as they began to switch to the new technology designed to enable them to offer lower cost converged services.

Frank D'Amelio, Lucent's chief financial officer, said: “We continue to expect Lucent's annual revenues for fiscal 2005 to increase on a percentage basis in the mid-single digits, which we believe will be at about the market growth rate.” The market is expected to grow by 4 to 6 per cent.

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