wsj article questions lu reducing reserves.
At Lucent Technologies Inc., for instance, "one would think, given the failing financial health of many of
Lucent's customers, these provisions would be increasing, not declining," says Carol Levenson, an industrial
analyst with GimmeCredit, a bond-research boutique. But in the quarter ended March 31, Lucent posted its
lowest provision for bad debts from customers since the quarter ended Dec. 31, 2000, when it added $370
million to its reserve. The $192 million first-quarter provision was down from $705 million in the year-earlier
period.
A Lucent spokeswoman says: "We review our receivables portfolio regularly and very carefully, and
record reserves that are fully compliant with generally accepted accounting principles." She notes that the
year-earlier quarterly provision was swollen by the bankruptcy-court filing of one of Lucent's particularly
big customers. The year-over-year decline, she says, "should be reviewed in combination with the trend in
our customer-financing levels," and the company's vendor-financing commitments have dropped nearly
70% in the past year.
The company's regulatory filings note that "a considerable amount of judgment is required in assessing the
realization of these receivables." The filings add that the company's financial statements, in general,
"require management to make significant estimates and assumptions." |
