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Optical/IP

Earnings News Batters LR Index

AT&T Corp. (NYSE: T) and Lucent Technologies Inc. (NYSE: LU) posted huge losses on Tuesday, and SBC Communications Inc. disappointed Wall Street as well during a day that harkened back to the early 1990s.

The steady stream of bad earnings news continues to pressure the Light Reading Index, our list of leading optical networking equipment vendors and components makers. The Index, this morning trading down 0.86 to 101.91, is at an all-time low and is nudging the important level of 100. The Index has not dropped below 100 since it began tracking stocks in January 2000.

AT&T's actual second-quarter 2002 loss totaled $12.7 billion, or $3.49 a share, compared to a loss of 10 cents a share during the year-ago quarter. The company's revenues fell 6.2 percent during the quarter to $12.1 billion, and it expects a slightly higher rate of revenue decline during the next quarter.

However, AT&T's loss wasn't as bad as it looks on paper. The quarterly numbers took into account a $13.1 billion writedown in the book value of the AT&T Broadband cable unit that Comcast Corp. (Nasdaq: CMCSA, CMCSK) is buying.

SBC reported actual second-quarter earnings of $1.85 billion, or 55 cents a share, compared with the $2.07 billion, or 61 cents a share, it reported a year ago. Its revenues for the quarter were $13.1 billion, nearly 4 percent off the $13.6 billion the company reported during the year-ago quarter.

Lucent's actual quarterly loss for its third fiscal quarter of 2002 was $7.9 billion, or $2.30 a share, compared to a loss of $1.9 billion, or 55 cents a share during the year-ago quarter (see Lucent Loses $7.9B, Plans Layoffs). Its revenues fell to $2.95 billion during the quarter from $5.89 billion in the year-ago quarter -- a 50 percent drop. The company says it will cut 7,000 more jobs by the end of this year; it had 53,000 workers as of June 30.

All the while, capital spending guidance coming from carriers is either holding or dropping off. AT&T's projected capital spending for 2002 remained in the range of $3.8 billion to $4.2 billion. SBC, however, now says its 2002 capital spending will be "below $8 billion," down more than $1 billion from its previous guidance, which was a range of $9.2 billion to $9.7 billion. This follows BellSouth Corp.'s (NYSE: BLS) announcement yesterday that it would spend $500 million less on telecom and networking gear than it had originally anticipated (see No Relief From BellSouth).

Just before noon, shares of Lucent were down $0.39 (18%) to $1.71. SBC shares were off $0.94 (4%) to $23.02. AT&T bucked the trend as its stock climbed $0.01 (11%) to $9.53.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
BobbyMax 12/4/2012 | 10:03:22 PM
re: Earnings News Batters LR Index One of the common thread among all the RBOCs, AT&T and its spin offs is the incompetecy of management, incompetecy board members, life time tenure of CEOs and their cronies, misuse of resources. delayed decisions and tremendous inefficiencies. For example, AT and T was single handedly destryed by Armsstrong and his cronies. He has tremendous damage to the company from which it would never recover. Similarly Lucent, SBC, Verizon, and BellSouth would be less than profitable for another ten years or so.

It is a sad day for the world's best companies.
Belzebutt 12/4/2012 | 10:03:12 PM
re: Earnings News Batters LR Index Loss from operations of $7 billion??? Surely this can't be right, if NT posted an operating loss of $300 million.

I'm trying to compare these two companies' results and I'm having a hard time with Lucent here... why the huge charges? Which one is closer to break-even, not including one-time charges?

At first sight it seems like LU with this huge loss, many more employees and almost the same revenue is in big trouble! Let me know if I'm missing something. How much cash do they have? Seems like NT's results are more logical and clear to read.
BenGrahamMan 12/4/2012 | 10:03:12 PM
re: Earnings News Batters LR Index http://www.rbcpa.com/

go to section labled investment management, then on right side , select Lucent.
ivehadit 12/4/2012 | 10:03:09 PM
re: Earnings News Batters LR Index belzebutt,
the article should have pointed this out (like it did AT&T but typical of LR re: lucent or nortel).

lucents loss was highly exaggerated by accounting tricks.

actual loss is around what they guided to earlier this month. cash reserves are also up, and company told employees (those that remain) that they may get a raise this year.

the bad news is revenues are declining (like nortel) and company still shows a loss and no signs of capex bottoming out.

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