The company waited more than three weeks for permission from its bankers, getting the go-ahead on Aug. 16.
Schacht is winning approval from some investors for what he's already done. In the June quarter, the company consumed only US$110 million in cash, having cut US$1.3 billion in annualized costs in the first round of restructuring.
In August, it raised US$1.9 billion in a convertible-share sale, giving the company some breathing room for phase II.
``Henry is doing all the right things,'' says Eli Salzmann, research director at Lord Abbett & Co., whose Lord Abbett Affiliated Fund bought shares of Lucent for about US$6 each in June. ``He understands that Lucent isn't a growth company anymore.'' Nor is telecom likely to be a growth industry -- and that may stand between a shrunken Lucent and Schacht's targets.
By predicting a return to profitability next year, he's taking a stand almost no other executive in the industry has been willing to take. Executives at Nortel and Cisco Systems refuse such forecasting, citing the cloudy outlook for demand.
According to Merrill Lynch & Co, US phone companies will cut spending on equipment, software and services this year to US$87 billion, down 14 percent from a record US$102 billion last year.
In 2002, spending will fall another 12 percent to US$76 billion, Merrill figures. The company estimates that global spending by carriers will drop 4 percent in 2001 and 8 percent next year.
That leaves Schacht with little room for miscalculation. If Lucent doesn't meet its revenue targets or trims expenses too slowly, he may have trouble raising cash.
Lucent has no major businesses left to sell without cutting into its core, the equity markets are effectively closed to technology companies and Lucent's credit has been downgraded to junk status.
Forgotten in Schacht's success at Cummins is that it took him a decade to complete that company's turnaround.
Lucent shareholders are unlikely to wait that long.
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