LUCENT REPORTED a 51% drop in fiscal first-quarter net, falling short of analysts' lowered expectations. The maker of telecommunications equipment continues to face investor questions about its aggressive accounting methods.
...Lucent has used "a whole myriad of aggressive accounting moves to boost its growth," said Robert A. Olstein, manager of the Olstein Financial Alert mutual fund. "That, in my opinion, is not sustainable." Many of the issues recently were raised in a report by the Center for Financial Research and Analysis Inc. of Rockville, Md.
Donald K. Peterson, Lucent's chief financial officer, said he is confident about the company's accounting. "I have full confidence ... in it being accurate, in it being complete and in it being fully disclosed," he said.
Mr. Peterson noted that Lucent more than a year ago underwent regulatory review of its accounting at the time of its acquisition of Ascend Communications Inc. "We were not asked to make any changes in our reports," he said.
Indeed, even critics concede that Lucent's accounting is within generally accepted accounting principles. "But it is pushing the rules," said Brad Rexroad, an analyst for the Center for Financial Research and Analysis.
Mr. Rexroad estimates that Lucent in its fiscal year ended Sept. 30, 1999, added about 27 cents a share to its earnings through a series of deft accounting moves. The company reported fiscal 1999 net income, excluding one-time gains, of $1.22 a share.
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Rexroad sees a more than 25% increase (27/95) in reported earnings coming from the 1998 change in pension-plan accounting, booking lower reserves for costs related to obsolete inventory and lowering its bad-debt reserves, among other accounting maneuvers. |
