Earlier today telecom equipment maker Lucent Technologies (ticker: LU) announced that it expects slower revenue growth this year than previously forecast because of lower sales in the United States and China. Here is an extract from Lehman analyst Jiong Shao's note to clients discussing Lucent's announcement:
While we are clearly disappointed by the Dec-Q miss, the revised FY06 revenue guidance suggests that Lucent's revenue expectation for the remaining three quarters of the fiscal year remain unchanged. We also expect there will be no change in gross margins and Lucent cost structure. Therefore, we don't anticipate much estimate revisions beyond the Dec-Q in FY06 and no change in FY07 estimates when the company provide full Dec-Q results.
More specifically, LU announced it expects revenue of about $2.05B in the Dec-Q, down 16% QoQ/12% YoY, below our/St. estimate of $2.46B and it lowered FY06 revenue guidance to flat to low single digit growth from previous guidance of mid-single digit growth. Lucent attributed the sequential decline to lower sales in the United States and China, which we believe is largely reflective of a pause in spending as carriers have largely concluded 2G CDMA spending while they transition to ramp up 3G CDMA projects. Looking further ahead, consistent with the company, we expect revenues in the second half of the fiscal year to be significantly higher than the first half of the year, led by 3G CDMA buildouts, IMS deployments and services accompanying the projects.