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In early action, Lucent (LU: news, chart, profile) shares dropped 19 cents to $1.73.

After U.S. markets closed Tuesday, the Murray Hill, N.J.-based telecom-equipment maker said sales would decline 18 percent from the second-quarter level of $2.4 billion -- or roughly $1.97 billion.

The net effect: a fiscal third-quarter loss of 6 cents to 8 cents a share. Wall Street analysts, on average, estimated a loss of 5 cents, according to Thomson First Call.

The company blamed lower spending in North America and a delay in the acceptance of a major networking-supply contract.

"These two items accounted for virtually all of the decline," said Lucent Chief Financial Officer Frank D'Amelio in a statement.

Looking ahead, the company said it sees continued "uncertainty" in the telecom business. It no longer believes it will return to profitability this year, saying that will have to wait until fiscal 2004.

Lucent also said it will further cut costs to lower the point at which it can break even. Previously, Lucent has said it could achieve a profit on $2.4 billion in sales.

Spokesman Bill Price indicated the company will try to find other ways to boost revenue before resorting to layoffs. "It's too early to say what the impact will be on employee headcount," he said.

Like other major industry firms, Lucent has cut tens of thousands of jobs in recent years in the face of the worst telecom slump in U.S. history.