Lucent Revises 4th-Quarter Sales Downward, Pulls Forecast
Lucent Technologies Inc. sprang yet another nasty surprise on investors Tuesday, reducing its already-reported fiscal fourth-quarter revenue by $125 million and revealing that it might not make its profit forecast for the upcoming quarter.
The revelations spurred a renewed sell-off in Lucent’s stock, which hit its lowest level since 1997. The shares fell $3.38, or 16%, to $17.56 in New York Stock Exchange trading, and are now down 75% this year.
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 maker of telecommunications equipment said. It declined to provide further details.
As a result, Lucent will restate its fiscal fourth-quarter revenue, 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% from the year-ago period and the company would only break even, a hard fall from its days of steady, double-digit profit increases.
The latest bad news for the former Wall Street darling comes after a string of disappointing earnings, the ouster of its chief executive, 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 Bros. Inc. in New York.
Henry Schacht, who returned to his old job as Lucent’s chairman and CEO 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 profit 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 planned to streamline its upper management and had already cut 240 such jobs as part of companywide layoffs. Analysts say layoffs could eventually total as many as 10,000, nearly 10% of Lucent’s work force.
