Lucent Technologies Inc. (NYSE: LU) Wednesday morning reported shrinking losses and a slight uptick in revenue, but executives warned that they still didn’t see signs of recovery in the North American telecom equipment market.

Bottom Line: Lucent's quarter was on plan, but the company isn't saying what's in store for the rest of the year, other than the fact that it still intends to return to profitability.

The company recorded revenues of $2.4 billion in the second fiscal quarter of 2003, which represented a 16 percent increase from the $2.08 billion in revenues achieved in the first quarter. This revenue boost left Lucent with a net loss of $351 million, or 14 cents per share, compared to a loss of $495 million, or 16 cents per share, in the year-ago quarter.

Excluding one-time items, Lucent's loss was 8 cents a share. Analysts were expecting a loss of 10 cents a share on sales of $2.43 billion (before one-time items), according to Thomson First Call.

”This has been an important and pivotal quarter -- we’ve made major progress operationally and put major distractions behind us,” said Lucent CEO Pat Russo on the quarterly conference call, referring to the ongoing restructuring and the settlement of shareholder lawsuits (see Lucent Pays Big to Settle Claims). “Although our revenues increased sequentially, it should not be seen as an indication of a recovery in the industry, which continues to have uncertainty.”

Some analysts were impressed with the quarter, citing the company's ability to manage the loss of cash and make progress toward restructuring.

"Lucent reported a very solid March quarter this morning, with gross margins and cash projections standing out as positive surprises," wrote Lehman Brothers analyst Steve Levy in a research note titled "Lucent Lives!"

The revenue growth came primarily from Lucent’s Mobility Solutions group, as well as from new orders in the Asian market, according to Lucent executives.

The performance of the company's two major groups broke down as follows: