Conference Call regarding Q1 F2001 earnings and future guidance
January 24, 2001
1. Key customer year-to-year drop of 71 %. This customer bought a lot less. Won’t name customer.
My thoughts are they should name this customer. This will be the talk of the town and rumors will circulate. LU could have named the customer, which of course we will find out shortly anyway. My guess is AT&T.
2. Expects increased sales in 2nd quarter. Impact of cost and expense reductions to be seen in 3rd and following quarters.
3. When are up revenues going to be achieved. Guidance as to gross margin, SG&A , research and development.
No answer by Lucent. My thoughts are they are just focused on staying silent.
4. 10 % customers, who are they.
5. This CC is very tame. Management keeping focused on silence.
6. What are the issues with sold off receivables?
Some customers having difficulty and last minute surprises. My thoughts are that Lucent still has ongoing collection concerns.
7. Are you having issues getting paid? Any rough breakdown as to wireless, vs. optical vs. circuit switching.
Optical grew all other segments had no or lack of growth (I missed this one a little, might be a poor interpretation)
8. Comments on WorldCom optical deal.
No comment from management. I sensed some optimism. I really liked the way they approached that. I think CFO said, “When we can announce something we will.” It reminded me of a scene in the film High Fidelity when they discussed the meaning of the word “yet”
9. Does Lucent think they could get revenue growth to the goal of industry growth rate?
Mr. Schacht said he sticks to growth rate discussed on December 20, 2000. I believe he mentioned that he still expects to achieve
or exceed industry Sales growth rates.
10. Optical growth of about 50 %
11. Optical was previously a concern with performance. What is the outlook of optical going forward?
Improved results, customers looking at advanced products, including those in Europe (to me that sounds like Belgium LamdaRouter OC-768 system with Global Crossing (GX).)
12.According to Lucent, There will be issues of vendor financing for the expensive 3G area. Lucent said they would be careful and selective. Decisions will be made heavily based heavily on economic decisions.
13. Looking to rebuild momentum of North American sales. Reduced emerging service providers.
This is key (note to myself), who are the emerging service providers.
14. Status of optical
* componentry shortage in optical. Capacity problems only, which has hurt inventory levels. Needs to ship on a linear basis.
* Trials with Global Crossing (GX) “so far so good”
15. Are previously discussed future sales credits going to be material, for how long and how much of a future impact will these have?
Lucent has stopped dictating delivery demands to customer. Lucent will negotiate at time of sale and not require follow-throughs.
Visibility of credits seems to have been evaded as a discussion by Lucent managagement. Schacht went onto say that they had an effect in 1st quarter. The effect would not be material in 2nd quarter (again, I was weak on the 2nd quarter comment, I will need clarification).
16. Again confirmed revenue guidance for F2001 is maintained or exceed industry rates. Lucent discussed and emphasized incentive compensation rates based on performance. Again, goal is to be at or above market for F2002. (I need confirmation of this; I can’t recall if he said F2001 or F2002.
17. Lucent was asked to discuss OC-192 optical transport system.
They are on trials, doing well “nothing new to report”
I was disappointed that Lucent was not vocal on many issues. They did make passing comments on several optimistic situations, which makes me concerned as to total silence on potentially difficult issues. The SEC form 10 – Q will give much better analytical information.