Lucent Lowers Earnings Bar, Predicts ComebackLucent Lowers Earnings Bar, Predicts Comeback

Beleaguered telecom-equipment maker Lucent Technologies Inc. anticipates lower-than-expected results for its first quarter ending Dec. 31, as a result of dwindling telecom spending. The company says it expects a pro-forma loss of 23 to 26 cents a share, and revenue of $3.1 billion to $3.4 billion. Analysts had been expecting a loss of 17 cents a share on revenue of $4.47 billion.

Lucent has weathered significant losses recently, as well as several rounds of layoffs. The company may finish the year with half of the 123,000 employees it had in January. But Lucent remains positive. The current quarter, according to the company, will be the low point for Lucent sales. Lucent foresees sequentially improved results for the remainder of its financial year.

Yankee Group analyst Zeus Kerravala says Lucent will ultimately emerge from the spending slowdown as a "smaller, more focused company." While that might be a best-case scenario for Lucent, it's not necessarily great for its customers. "If Lucent execs continue to cut staff, they're going to cut products," he says. Customers are going to ask, "'is this product even going to be supported by them in a year? And if I'm not already a customer, why would I put myself in that situation?"