Back on the molecule-thin surface of the Bubble, it was hard to find an analyst who didn't love tech-king Lucent (NYSE:LU). However, when the company reports its fiscal Q1 2006 numbers to Wall Street tomorrow, it will be playing to one extremely jaded crowd. (Reason enough to get contrarian Fools interested, don't you think?)

Wall Street wisdom:

  • General consensus. Thirty-six analysts follow Lucent, but few of them are scattering roses at its feet today. Barely one in 10 rates the company a "buy"; 17 wafflers counsel "holding" the stock; and -- now that the company's playing in penny stock land -- 14 have bit the bullet and muttered the dreaded "sell."
  • Revenues. Here's why. Analysts believe Lucent grew revenues by just under 2% this quarter, versus a year ago.
  • Earnings. And they don't think any of the growth dropped to the bottom line, either. The consensus is for flat earnings of $0.04 per share.

Margin watch:
Reviewing the company's recent performance in transforming top-line sales into bottom-line profits, we see a mixed bag at Lucent:

Margins%

6/04

9/04

12/04

3/05

6/05

9/05

Gross

42.0

41.8

42.1

41.9

42.4

43.7

Op.

14.3

13.8

13.5

12.8

13.4

14.5

Net

10.3

22.1

20.2

22.0

21.5

12.6


All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing 12 months performance for the quarters ending in the named months.

Gross margins are inching up sequentially and showing noticeable improvement against their year-ago levels. Net and operating margins, on the other hand, are still wobbling from quarter to quarter.

Key ratios:
Now that the professional analysts have come around to seeing Lucent as the dog of a stock that it was half a decade ago, I'd love nothing more than to call them all wrong again and hang a "buy" tag around Lucent. But with only 6% projected long-term growth ahead of it, a P/E of 10 and a price-to-free-cash-flow ratio more than twice as large, I can't bring myself to use the "b" word here.

Competitors:
Facing competition in competitors ranging from high (Cisco (NASDAQ:CSCO)), to low (Nortel (NYSE:NT)) to French (Alcatel (NYSE:ALA)) quality, Lucent's work remains cut out for it. The fact that it's been able to grow its gross margins offers hope for the future, but I'm just not convinced that the turnaround train has arrived at the platform yet.

Fool contributor Rich Smith does not own shares of any company named above.