Ah, Lucent (NYSE:LU). What a disaster. Yesterday the company announced its 13th quarter with a loss and pushed back its September target for a return to black from red. Revenues declined 18% sequentially and 33% (gulp) year over year, resulting in a loss of $0.07 a share, vs. last quarter's $0.14 and a whopping $2.35 a year ago. Shares barely budged. Is the market expecting a turnaround?

That takes some faith. Management has a tough challenge. It's not just the telecom capital-spending debacle that has devastated this company, but some of the worst financial (and other) management we've seen from a company that didn't go bankrupt.

But it is only natural that where there is disaster, astute investors wonder if there is opportunity. Let's look at some highlights of the five quarters since the Agere (NYSE:AGRA) spinoff:

              Cash    Total    Cash           & Equiv.  Debt*   Burn**Quarter       (all $ bils.)       June 2003  $4.93   $6.87  $(0.326)Mar  2003  $3.44   $5.28  $(0.897)Dec  2002  $3.74   $6.50  $(0.928)Sept 2002  $4.42   $6.30  $ 0.408June 2002  $5.42   $6.83  $(0.143)*Short term + long term + preferred stock
** Net cash from operations - capital expenditures
(No adjustment for depreciation, amortization, or
interest earned.)
Total SG&A* Revenues Gross as % of Quarter ($ bil.) Margins RevenuesJune 2003 $1.97 29% 21%Mar 2003 $2.40 32% 20% Dec 2002 $2.08 22% 19%Sept 2002 $2.28 (15%) 43% June 2002 $2.95 22% 30%*Selling, general and administrative expenses

Lucent is weighed down by more debt than cash, a trailing-12-month cash burn of $1.7 billion, and flat-to-declining revenues. Cost-cutting measures that initially showed results appear to have run out of benefits. While a positive, the just-announced $1 billion contract from Sprint PCS (NYSE:PCS) will need a lot of company for Lucent to become a Phoenix. For one thing, despite some new wireless contracts, the company really needs speedier adoption of wireless 3G networks requiring its CDMA telecom equipment.

Some corporate governance praise: For five quarters, the releases accompanying Lucent's quarterly earnings have ranked at the top for financial disclosure. While in theory what matters is the actual 10-Q filed with the SEC, the reality is that the financial media report and investors rely on the info in press releases. Lucent provides all three financial statements plus all sorts of extra data. Folks, they even break out the quarterly cash flow. Few companies can be bothered to cough up cash-flow statements in their releases, much less offer each quarter's numbers in addition to the standard cumulative figures that appear in 10-Qs. Very classy, Lucent.

Great as it is that the management team appears committed to transparency, right now the sun shines squarely on continued operational weakness. So if you find yourself tempted to invest, here are two bits of advice: Make sure you're comfortable with speculation and catch Chuck Saletta's must-read analysis on our Lucent discussion board. You'll be glad you did.

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