Ref < companies often take a blood bath and then make their numbers look good for several quarters >
That is an old trick used by a new CEO. Take a huge write-off ( the largest they can get away with), blame it all on the disgraced ex-CEO, and then make the subsequent quarters look real good, and the new CEO looks like a hero to the Street. At Apple, first Gil Amelio did it, and when he was thrown out, Steve Jobs repeated it.
The easiest way to do it is by writing off old inventory to nothing by claiming that it is obsolete. Then when you manage to sell it later at a decent price, you suddenly boost the profit enormously. I suspect that recalling the Lucent inventory from the distributors may be the ploy to taking a huge inventory write-off.
The bad news is that the there will be dramatic Lucent losses in the coming quarter, but there will be large gains in the future. The market rewards growth with huge PE multiples, and CEOs fudge numbers to show growth and boost the stock. When the CEO cant meet market expectations, because fudging finally reaches a legal limit, he is sacrificed. But he has managed to feather his nest by selling his holding well before the market catches up with him. And the new CEO begins the cycle anew !
Hate to be cynical, but this is a often repeated tale. |
