Wireless sales cement Lucent profits

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Lucent Technologies, the largest US telecommunications equipment maker, reported its second successive profitable year although fiscal fourth quarter profits fell by 69 per cent compared to the year ago period when a tax refund and other items boosted profits.

Net income fell to $374m, or 8 cents a share, from $1.21bn, or 23 cents, a year earlier when the Murray Hill, New Jersey-based company recorded a $1bn or 19 cents a share tax gain. Profit in the latest period was boosted by a $107m or 2 cents a share gain, mostly due to income tax items.

Gross margins improved to 46 per cent in the fourth quarter from 41 per cent in the year-ago perid.

Revenues for the quarter increased by 1.2 per cent to $2.43bn and by 4.4 per cent to $9.44bn for the year. Within the total, Lucent’s mobility business which supplies equipment to the wireless industry continued to show momentum.

Mobility revenues for the fourth quarter declined by 7 per cent to $1.07bn but increased by 12 per cent to $4.6bn for the year.

Senior executives dismissed concerns voiced by some analysts that the quarterly drop suggested that the wireless business had stalled, pointing out that contracts typically take years to negotiate and that Lucent’s mobility business has grown dramatically in recent years. “We are operating from a much higher base,” said Frank D’Amelio, Lucent’s chief financial officer.

Patricia Russo, chief executive, has steered Lucent towards sales of equipment to mobile-phone carriers including Cingular Wireless and Verizon Wireless in the US as they roll out 3G networks based on CDMA (code division multiple access) technology.

Networking and wireline equipment sales rose 6.2 percent to $739m. Lucent won contracts from companies including Hanarotelecom Inc., South Korea’s second largest provider of broadband Internet access, to provide equipment for VoIP services.

Ms Russo has built Lucent’s turnaround strategy after the technology crash around focusing on the technologies that will power the next generation of both wireless and wired communications networks.

“We have placed a big bet on .IMS (IP Multimedia Subsystem),” she said on Wednesday. ““We have firmly established ourselves as the leader in the race for next generation neworks based on the IMS architecture, and we have been making steady progress in the areas we have targeted for growth such as IMS, 3G mobile networks, services and next-gen access and optical.”

She highlighted multi-year contracts that Lucent announced last week to provide IMS services to both SBC Communications and Cingular, the wireless joint venture owned by SBC and BellSouth.

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