A couple of weeks ago, Lucent got a big lifeline – a $525 million order from Verizon for broadband wireless equipment that would help the mobile giant quickly roll out its EVDO network. The contract, while not big in terms of sheer dollars indicates that Lucent might survive the telecom downturn after all. I think the company really needs to cut its costs, lower its head count, before it can be deemed as “out of trouble.” But mobile is clearly, coming in handy.
It has a pretty decent market share in the CDMA market. I know it has been selling a lot of gear (which does not mean at a profit) in India, and other markets where CDMA is being used. According to Susan Kalla, analyst at Friedman Billings Ramsay, Lucent had about 40% market share in CDMA for FY 2003 and could grow above the industry growth rate of 6%-8% that is expected in 2004 in the CDMA market, estimated to be worth a $7 billion market. Kalla thinks Lucent cna grow its portion of the CDMA market to $2.8 billion in FY 2004, from $2.5 billion in FY 2003.
Lucent could also see its revenues get a little sizzle, thanks to 3G or as the guys on the other side of pond like to call it UMTS. (Given the negative image of 3G, why not!). Lucent only has about a 5% market share in UMTS in fiscal 2003, but FBR’s Kalla expects it to gain share as it grows above the industry rate of about 15% in 2004. In here research report she writes:
bq. “We believe that Lucent’s total mobile revenues could grow to $3.2 billion in FY04, from $2.9 billion in FY03. LU could continue to lead the market in CDMA upgrades to 3G in the U.S. We also expect LU to gain share in UMTS (the 3G upgrade for GSM systems) with success from its field trials at China Netcom, . In Europe, Lucent announced contracts at Telecom Italia, T-Mobile (Germany and the U.K.), Orange, and EPlus for UMTS PC modem card extensions from Novatel.