Lucent Predicts Q3 Decline

MURRAY HILL, N.J. -- Lucent Technologies (NYSE: LU - News) today announced that it expects revenues for the third quarter of fiscal 2006, which ended June 30, 2006, to be approximately $2.04 billion, subject to the completion of its quarterly closing process. The company's revenues were $2.14 billion in the second quarter of fiscal 2006 and $2.34 billion in the year-ago quarter. The sequential and year-over-year declines were due primarily to lower sales to North American mobility customers. To a lesser extent, the year-over-year decline was due to decreased revenues in China.

On a preliminary basis, the company expects to report earnings of approximately 2 cents per diluted share for the third quarter. These results compare with earnings of 4 cents per share in the second quarter of fiscal 2006 and earnings of 7 cents per diluted share in the year-ago quarter. In the year-ago quarter, net income was positively impacted by about 2 cents per diluted share, primarily due to the favorable impact of tax items and recoveries of bad debt and customer financing.

"During the third quarter, our North American mobility business was adversely impacted by a slowdown in spending on some of our current-generation wireless solutions," said Lucent Technologies Chairman and CEO Patricia Russo. "However, we are beginning to see some of our customers move toward the next phase of mobile high-speed data. And in fact, we recently announced contracts with Verizon Wireless and Telecom New Zealand for our EV-DO RevA solution, which we expect to make commercially available in late September.

"Overall, our year-to-date results also have been affected to some extent by delays in spending that we believe are attributable to the consolidation efforts of certain customers," added Russo. "That said, we believe consolidation will lead to opportunities as service providers look to us to help them integrate their large, complex networks."

"We expect investment in both CDMA and UMTS to increase going forward, driven by the introduction of EV-DO RevA and HSDPA solutions," said Lucent Technologies Chief Operating Officer Frank D'Amelio. "As a result, assuming that our EV-DO RevA and HSDPA rollouts 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."

Lucent Technologies Inc. (NYSE: LU)