Posted on 07/24/2002 1:36:45 AM PDT by sarcasm
The storm of terrible news in the telecommunications sector showed no signs of abating yesterday, as industry giants AT&T and Lucent Technologies reported a combined $20 billion in losses. Lucent said it will cut an additional 7,000 jobs.
A $13.1 billion charge related to the plummeting value of its AT&T Broadband cable television properties obscured what analysts called a few positive glimmers for AT&T.
Excluding one-time charges, AT&T reported earnings double Wall Street projections, said it could beat profit forecasts for this quarter and said its collapsing long-distance business could be at least stabilizing.
Lucent reported its ninth straight quarter of losses as its sales of telecom gear plunged to half the level of a year ago. Its shares sank 21 percent, closing down 45 cents at $1.65.
The company's $7.8 billion quarterly loss included a $5.8 billion writedown of the value of operating losses it can use to reduce tax bills, based on the likelihood that it will be years before the company is again profitable enough to utilize them. Lucent also took an $837 million charge related to its $1.3 billion acquisition of a switching device maker.
"It's going to be a tough road through the rest of this year and most, if not all, of next year" for Lucent and other telecom hardware vendors, said Tim Smith, Gartner Dataquest's chief analyst for public network infrastructure. "Guessing where the bottom is a very difficult thing at this point."
Patricia Russo, Lucent's chief executive, said the Murray Hill, N.J., company had thought spending by the world's phone and Internet companies had bottomed out six months ago, and they would soon step up capital purchases. "Like many others," Russo said, "we were wrong. The level of spending has pulled back even further."
On a "pro forma" basis that is not considered standard accounting, Lucent said it lost 16 cents per share, worse than the 14-cent average projection of Wall Street analysts polled by Thomson First Call.
Having already slashed more than half its work force in the last 18 months through layoffs and the spinoffs of Avaya and Agere Systems, Lucent said it expects to cut an additional 7,000 of its 53,000 remaining jobs by the end of the year.
Lucent said it is continuing to slash operating expenses in hopes it can turn a profit on quarterly sales of $3.5 billion.
Russo said the company continues to predict a return to profitability sometime late next year. Lucent recorded revenues of $2.95 billion during the quarter that ended June 30, down 16 percent from the first quarter's $3.52 billion and nearly 50 percent from the same quarter in 2001.
In contrast to the prolonged collapse on the equipment-making side of telecom, AT&T gave some indications that the worst of its swoon may be past, although its shares fell 72 cents, or 7.6 percent, to close at $8.80. AT&T is down nearly 48 percent so far this year.
AT&T posted a net loss of $3.49 per share for the second quarter. Leaving out the $13.1 billion in "goodwill and franchise impairment" charges related mainly to cable units it is merging with Philadelphia-based Comcast, AT&T said it achieved a profit of 7 cents per share, beating the Thomson First Call consensus forecast of 3 cents and the second quarter 2001 result of 4 cents per share. For this quarter, AT&T said it could achieve earnings of as much as double the Thomson-estimated 3 cents.
AT&T's net revenues fell 6.2 percent to $12.1 billion, driven by a nearly 22 percent collapse in residential customer spending, but the company said it expects the revenue slide to slow this quarter.
That's CNNMoney's After Hours page
Click on the left side margin for foreign markets.
Foreign markets are down from 2.25% to 6.50%. The European nations are down around 3 to 4%, with the Asian markets not far behind. That 6.5% is the Denmark I believe.
Nobody can tell me that the CEOs of Enron and the recent Communications giant that went under didn't break any existing laws. And frankly it is becoming a national embarassment that they haven't been brought up on charges yet.
As for Arthur Anderson, it is sounding more and more like the top 100 of that agency should be behind bars for the next few decades.
The idea that there is any doubt that any laws were broken and that we need to devise new laws to fix this is absolute nonsense. Has anyone in our current justice department heard of the word FRAUD?
I agree that people should know better than to jump in the market. Heck if we'd have all listened to our inner voices nobody would have made a dime in the late 1990s. As it is, fortunes were made. People were bankrupted too.
From 1995 or so on, I kept my money on the sidelines. I could have made a lot of money, but the P/E ratios told me that the bubble would burst sooner or later. My TSAs remained in tact until the market landed around 2100 on the NASDAQ. At that point I thought things had settled out. Boy was I wrong. Oh well.
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