Lucent Technologies told investors Tuesday that it will not meet analysts' reduced profit estimates in its fourth quarter due to weak profit margins and sluggish sales of its circuit-switching equipment. Lucent, which warned in July that it would miss estimates in the quarter, said it now expects to post a profit of between 17 cents to 18 cents a share in the quarter. Analysts surveyed by First Call lowered their initial profit estimate from 42 cents a share to 27 cents a share following the July warning. Apparently, Lucent was a bit too optimistic when it delivered the dour news in July. It now expects to record sales of between $9.3 to $9.4bn, roughly a 15 percent improvement from the year-ago quarter. Company officials blamed weak margins in its optical systems business, a rising bad debt reserve and a brutal decline in demand for its circuit-switching equipment. It also said the lacklustre fourth quarter will result in lowering sales and earnings expectations for fiscal 2001, although it did not provide any details. Ahead of the warning, Lucent shares closed off $1 to $31.31. Lucent officials said it expects gross profit margins of between 39 percent to 40 percent in the quarter. The company said it had strong overall growth in the wireless business but would report flat growth primarily due to a comparison related to a major foreign contract in the year-ago quarter. Sales from optical networking systems, including optical fibre, were down about five percent and switching systems were down about 13 percent. On the bright side, it enjoyed strong sales in its microelectronics and communications units with both growing more than 50 percent in the quarter. Company officials said fourth quarter sales and earnings will result in an increase in fiscal year 2000 pro forma sales from continuing operations of approximately 14 percent and a decline in pro forma earnings per share from continuing operations of approximately ten percent to 11 percent. Last quarter, Lucent topped analysts' estimates when it posted a profit of $1bn, or 30 cents a share, on sales of $8.7bn. Its shares fell to a 52-week low of $28.06 in September after peaking at $84.19 in December. Twenty-four of the 35 analysts following the stock rate it either a "buy" or "strong buy". See ZDII for US tech investor news. See techTrader for more technology investment news, plus quotes and research. To have your say online click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.