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Lucent Technologies (LU – 18-13/16), the world's largest producer of telecommunications equipment, has announced a 30-cent-per-share loss for their first fiscal quarter. Wall Street was already expecting a loss, versus profit of 33 cents for the same quarter of last year, but this figure exceeded estimates by three cents per share. Revenue fell 26 percent for the period.
The brighter side of the coin is that LU has made plans for extensive restructuring. There will be about 10,000 layoffs, which amounts to about 10 percent of their workforce. The company will also take a charge related to the restructuring of one billion to 1.6 billion dollars.
The initial reaction in pre-market trading was a slightly positive move in the LU share price. Investors may be relieved that the company is making drastic changes to cope with current market conditions.
Two items mentioned in the LU news could affect other companies that do business with LU. The firm will be reducing capital spending significantly and they will also be increasing the amount of work outsourced to contract manufacturers.