Lucent shares plunge 16 percent over revenue restatement

Tuesday, November 21st 2000, 12:00 am

By: News On 6

TRENTON, N.J. (AP) _ Shares of Lucent Technologies Inc. plunged nearly 16 percent Tuesday after the telecommunications equipment maker revealed it was reducing its already-reported fourth-quarter revenues by $125 million and might not make its forecast for the upcoming three-month period..

The ``revenue recognition'' problem for the three months ended Sept. 30 was discovered while the company was completing year-end financial reports, the Murray Hill, N.J.-based company said. It declined to provide further details.

As a result, Lucent will restate its fiscal fourth-quarter revenues, which had been reported as an unaudited $9.4 billion, and will reduce its profit from continuing operations from 18 cents per share, or $600 million, to 16 cents per share.

In addition, Lucent said it can no longer confirm its forecast for its fiscal first quarter. It had predicted sales would be down 7 percent from the year-ago period and the company would only break even, a hard fall from its days of steady, double-digit profit increases.

Shares of Lucent fell $3.31 to $17.63 on the New York Stock Exchange, hitting their lowest level since mid-1997.

The latest bad news for the former Wall Street darling comes after a string of disappointing earnings, the ouster of its chief executive officer, layoffs and a series of restructurings. The company's once dominant position, as well as its credibility with analysts, has fallen sharply as it misjudged market trends and lost business due to production and other problems.

``We (now) have more questions about what's going on, and that's not good'' for the stock's value, said analyst Steven D. Levy, a managing director at Lehman Brothers Inc. in New York.

Henry Schacht, who returned to his old job as Lucent's chairman and chief executive on Oct. 23, said the company had notified the Securities and Exchange Commission and was having auditors and attorneys review all the finances and any related issues.

``Until that review is complete, we really wouldn't be able to comment on any further details or specifics,'' said company spokesman Bill Price. He said there is no timetable for completion of the review.

Just four weeks ago, Lucent fired its top executive, Richard McGinn, after warning of weak profits for an astounding fourth time this fiscal year _ despite booming demand for network equipment to expand and upgrade the Internet. Top rivals such as Nortel Networks, meanwhile, have been churning out rosy earnings reports and forecasts.

Schacht, 66, was at Lucent's helm from its inception in September 1996 until October 1997.

Two weeks ago, Lucent said it plans to streamline its upper management and had already cut 240 such jobs as part of companywide layoffs. Analysts say they could eventually total as many as 10,000 jobs, nearly 10 percent of Lucent's work force.