Troubled Lucent Technologies yesterday outlined plans to shed up to 16, 000 jobs, including 200 to 350 in the Bay Area, in an effort to cut costs and plug a rising geyser of red ink.
The New Jersey telecommunications equipment-maker said it will ax as much as 13 percent of its workforce worldwide, and 9 to 15 percent locally, during the next two months.
In Silicon Valley, the AT&T spin-off already has begun eliminating 200 positions at its messaging division in Milpitas, where workers design software to route voice mail, faxes and e-mail into customers' in-boxes. Spokesman Gary Bonham said it is consolidating its Messaging Solutions Group in Chicago and Columbus, Ohio.
In addition, Bonham said Lucent expects to cut an additional 150 jobs at unspecified California locations. Lucent employs 2,300 workers in the Bay Area and 4,400 statewide. In addition to the messaging group, Lucent also has a large professional services group in Sunnyvale and a data networking cluster in Alameda, stemming from its purchase two years ago of Ascend Communications.
The news didn't come as a surprise to analysts, who accurately predicted months ago that the company would eliminate 10,000 jobs to slash expenses in the wake of flagging sales. In addition, Lucent said it plans to sell factories in Oklahoma and Ohio that employ 6,000 workers, though Lucent said contractors likely will hire the majority of those workers.
Even so, the announcement could be a sign that Lucent's financial condition has continued to worsen in recent months. In November, a Lucent spokesman criticized The Chronicle for publishing a report of the job-cut predictions, insisting the company would not cut anywhere near 10,000 jobs.
Yesterday, Lucent reported it lost $1.02 billion (30 cents per share) -- 3 cents more per share than analysts expected -- during its fiscal first quarter,
excluding acquisition costs and other deductions. Revenue also fell 26 percent to $5.84 billion, worse than the 20 percent slide Lucent forecast earlier. (Including one-time gains, Lucent lost $395 million for the quarter, compared with a $1.2 billion profit a year ago.)
The shortfall was just the latest in a string of earnings misses during the past year, which led to the ouster of former chief executive Richard McGinn in October and helped push Lucent's stock down 61 percent during the past 12 months. Lucent also plans to take a $1.2 billion to $1.6 billion charge to pay for the severance payments and other restructuring charges.
But Wall Street applauded the scope of yesterday's announcement, which is expected to reduce expenses by $2 billion annually by year's end. Lucent shares rose 81 cents to $19.63 in what was essentially a flat day for trading overall.
In recent months, several other telecommunications companies have also reported disappointing financial news, saying telephone companies and Internet service providers are cutting back on capital investment. F5 Networks, Foundry Networks and Efficient Networks have all warned investors to expect lower earnings. And Nortel Networks, Lucent's chief rival, is also eliminating 4,000 jobs to cut costs.
But Nortel and a handful of other telecom and data networking firms, including Juniper Networks, have recently defied the hand-wringing and met or exceeded Wall Street's expectations.
And though Lucent has traditionally been a bellwether for the telecommunications industry, a growing number of experts say its problems are company-specific and not a harbinger of more bad news from competitors.
Seth Spalding of Epoch Partners saidmost of Lucent's rivals are reporting significant growth in earnings and sales, even if they are less than once expected, while Lucent's numbers have declined sharply.
"It's basically mismanagement," Spalding said. "There are a lot of moving parts that aren't tied down. It's basically gotten out of control."
Lucent insists it is taking steps to get back on track.
Chief executive Henry Schacht told analysts yesterday that Lucent has made several changes to steady its earnings. He said Lucent will stop counting revenues from sales before the items are delivered, and won't give customers discounts to move up planned purchases.
"With this announcement, we are outlining a comprehensive set of actions to rebuild the company for long-term, sustainable profitability," he said.
But Spalding said it won't be easy to turn the ship around quickly. "We think the stock is going to be relatively dead money for the next year," he said.
E-mail Todd Wallack at twallack@sfchronicle.com ., Chronicle wire services contributed to this report
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