Shares of Lucent Fall on Report

Friday, February 9th 2001, 12:00 am
By: News On 6

NEW YORK (AP) — Shares of Lucent Technologies Inc. fell nearly 10 percent Friday after The Wall Street Journal reported that the Securities and Exchange Commission has launched a formal investigation of Lucent's accounting practices.

The Journal said that the SEC's enforcement division is examining whether the telecommunications equipment maker improperly booked $679 million in revenue during its 2000 fiscal year, which ended Sept. 30.

It cited people familiar with the investigation that it did not identify.

Lucent, once a highflying spinoff of AT&T Corp., restated the revenue in December after conducting its own investigation.

Shares of Lucent, one of the most widely held stocks, were down $1.61 to $15.28 in morning trading on the New York Stock Exchange.

Lucent spokesman Bill Price said Friday that the company has been communicating with the SEC since November, and has already dismissed one employee as a result of its own internal investigation.

``We made this information public as soon as we discovered these issues back then,'' he said. ``We voluntarily brought these issues to the SEC and the public at that time. ... We fully expected that the SEC would look into this matter thoroughly.''

As part of its restatement, the Murray Hill, N.J.-based Lucent deducted $199 million in credits offered to customers, and $28 million for a partial shipment of equipment, the Journal said. It also took back an additional $452 million in revenue it had sent to its distribution partners but never actually sold to end customers.

The newspaper said the SEC commission staff is investigating Lucent's procedures for booking sales, especially its use of ``nonrecurring credits,'' or one-time discounts, given to customers and its accounting treatment of software-licensing agreements.

It said the SEC is also looking at how Lucent recognized revenue on sales to its distributors, who may not have sold the products.

SEC spokesman John Heine declined to comment on the report, citing the SEC's policy not to confirm or deny investigations.

Lucent's stock has lost more than 77 percent of its value since first hinting of financial difficulties with an earnings warning in January 2000.

Lucent's board fired Richard McGinn as chief executive in October after Lucent had missed numerous quarters of revenue and earnings targets.