Lucent Technologies Inc, the nation's leading telecommunications-equipment maker, recorded its first annual profit since 2000, fueled by rapid growth in its wireless telephone division, the company announced yesterday.
After years of losses and double-digit declines in revenue, Lucent chief executive Patricia F. Russo declared that 2004 was the year of the company's long-awaited turnaround.
"It was really a pivotal year for us financially," Russo said in an interview.
The telecommunications equipment industry is benefiting from a global trend in increased spending by large telephone companies, Russo said. "We have the benefit of an industry that has stabilized and returned to growth," she said.
Lucent reported a profit of $1.14 billion in its 2004 fiscal year, which ended Sept. 30. For the previous fiscal year, the company reported a $770 million loss. Revenue was $9.05 billion, up 7 percent from 2003.
The company reported fourth-quarter revenue of $2.4 billion, a 19 percent increase from the comparable quarter last year. Profit in the fourth quarter was $348 million, up from $77 million.
Lucent is benefiting from increased spending on wireless networks, particularly wireless high-speed data networks, Susan Kalla, an analyst with Friedman, Billings, Ramsey & Co., wrote in a report yesterday.
Verizon Communications Inc., Lucent's largest customer, announced this month that it will increase spending on equipment by 8 percent in 2004. Kalla estimated that Verizon may boost wireless spending by as much as 24 percent in 2004.
Lucent recently announced a $5 billion contract to expand Verizon Wireless data networks in 14 cities. It is working on similar projects in Europe, South America and Asia.
Sales of wireless equipment totaled $1.1 billion in the fourth quarter, a 75 percent increase from the comparable quarter last year. Wireless sales accounted for $4 billion of the company's revenue in fiscal 2004. In contrast, spending on traditional wired networks totaled $2.9 billion.
"I think it's a really big deal to the industry," Russo said of the wireless data technology.
Since 2000, Russo has led an effort to transform Lucent from a telecommunications conglomerate with 126,000 employees and revenue of $28.9 billion into a more narrowly focused and much smaller company. Today Lucent has 31,800 employees and revenue under $10 billion.
Russo has sold divisions including its office equipment, microelectronics and power systems units. She also cut spending at the famous Bell Labs, which developed breakthrough technologies such as the laser, the mobile phone and the Unix computer operating system.
After several years of losses, Russo said company benefited from the combination of cost-cutting and increased capital spending by its biggest customers.
During a conference call with financial analysts yesterday, Frank A. D'Amelio, Lucent's chief financial officer, said the company is planning for revenue to increase in the "mid-single digits" during fiscal 2005.
Shares of Lucent rose 10 cents yesterday to close at $3.48.