After four years of ruthless cost-cutting and balance sheet repair, you can be fairly confident that Lucent Technologies
With flat top-line performance and guidance for single-digit growth this year, Lucent offers investors little to get thrilled about.
Overall, Lucent reported net income of $174 million, a fraction of the $1.21 billion Lucent earned in the fourth quarter of 2004 and the $349 million it reported a year ago. The company's $2.34 billion in quarterly revenue was up 3% from last year but down 3% sequentially.
What explains the flat sales? It's not as though big telecom carriers aren't spending any money. Juniper Network's
To be fair, Lucent is building an enviable position in third-generation wireless technology. The company is starting to recognize revenue from contracts with Verizon
But taking a big step into the future is awfully tough when you've got one foot stuck in the past. A hefty chunk of Lucent's business remains in legacy systems -- markets that are steadily shrinking, not growing. Reliance on sales from older systems such as circuit switching and ATM and Sonet continues to be the stock's Achilles heel.
Responding to the Q1 figures, the market, correctly in my mind, sheared nearly 8% off Lucent's share value. Now at $3.23, Lucent trades at about 1.5 times estimated 2005 sales of $9.6 billion. That's slightly less expensive than Nortel
Fool contributor Ben McClure doesn't own shares of any companies mentioned in this article.