In the latter half of the past decade, it might have been hard to imagine it would come to this. But the fact of the matter is that in the new millennium, Lucent (NYSE:LU) has something to prove -- specifically, that it can keep itself consistently profitable and not destroy capital.

Earlier this week, the company took another step in that direction, racking up its seventh consecutive GAAP-profitable quarter. Lucent reported $0.06 per diluted share in profits for its fiscal second quarter, marking a 50% increase over fiscal Q1 2005 and a 200% increase over fiscal Q2 2004.

Meanwhile, revenues remained flat sequentially and inched up just 6% year-on-year. And worse, the company continued to bleed cash at an even faster rate than in the quarter just past. Total cash outflows exceeded $750 million for the first half (1H) of fiscal 2005, as opposed to the year-ago period, in which Lucent had more than $90 million in positive free cash flow. This year's 1H losses canceled out and reversed the positive cash flow of fiscal 2H 2004, with the result that over the past 12 months, Lucent has been cash-flow negative to the tune of $368 million.

Of course, in the prose portion of its press release, the company spouted the usual happy talk about "profitable" this and "strength in" that before "looking ahead" to better days to come. But the numbers told a different tale. Revenues, you see, grew just under 5% between 1H 2005 and 1H 2004. However, the company's selling, general, and administrative costs were up 25% (not good), and it slashed R&D spending by 8% (not prudent).

In this Fool's opinion, Tuesday's earnings news simply didn't justify the 10% bump in price that Lucent received. On the contrary, if there was good news on Tuesday, it was contained not in the earnings release, but in the simultaneous announcement of a management reshuffling. Mind you, corporate reorganizations can be hit-or-miss, and the shifting of execs and the merging of departments gives little hope that Lucent will start generating cash in the immediate future. Still, the company is doing something. And that suggests, obligatory shareholder-placating verbiage aside, that management does indeed realize that something needs fixing.

In that regard, it's worth highlighting the return of Yurie Systems founder and ex-Lucent exec Jeong Kim, who will be taking over William O'Shea's job as head of Bell Labs. In Optical Illusions -- required reading for anyone who wants to learn the inside story of Lucent's millennial rise and fall -- author and Lucent authority Lisa Endlich spoke highly of Mr. Kim (as well as of Mr. O'Shea). If Lucent has to lose Mr. O'Shea to retirement at this critical juncture, shareholders should be pleased that the company has at least found a capable replacement.

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Fool contributor Rich Smith does has no position, short or long, in Lucent .