Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : TGL WHAAAAAAAT! Alerts, thoughts, discussion. -- Ignore unavailable to you. Want to Upgrade?

To: ChrisJP who wrote (71923)	11/22/2000 9:19:08 AM
From: Jim Bishop	Respond to of 150070

Nov 22,2000 Lucent to Restate Results Downward, Issues Warning for Current Quarter By Shawn Young Staff Reporter of The Wall Street Journal Lucent Technologies Inc. jarred Wall Street by saying that it plans to restate fiscal fourth-quarter results that were reported just last month, knocking at least $125 million off its revenue and two cents from its per-share figures. More Uncertainty: Lucent also warned that it can't vouch for financial projections for the current fiscal first quarter ending Dec. 31. The company's beaten-down shares fell 16% on the news. Lucent said the problem is related to how it recorded sales, a process known as revenue recognition. People familiar with the matter said the problem is related to the company's policies on how and when it counts proceeds from sales. Lucent said the issues surfaced as the company was preparing to file its annual report to the Securities and Exchange Commission. A Lucent spokeswoman said the issues were still being reviewed and declined to provide details. Lucent's terse announcement marks the fifth time in a year that the Murray Hill, N.J., telecommunications-equipment maker has warned of a financial disappointment. The company has been through a series of crises that have tarnished its credibility on Wall Street, sent its stock down nearly 80% and led to the ouster in October of its former chairman and chief executive officer, Richard McGinn. The company failed to anticipate demand for optical gear that moves data at ultrahigh speeds, and its internal accounting and forecasting systems have been in disarray. Probably the most disturbing aspect of Lucent's announcement was its withdrawal of guidance for the current quarter, which is nearly two-thirds over, said Steven Levy of Lehman Brothers. That indicates Lucent still has a hazy view of even its most immediate prospects. (Separately, Lucent rival Nortel Networks Corp. reinforced bullish revenue projections, but some analysts remain concerned about an expected boost in its financing of customer purchases.) Lucent has conceded that it has been booking too many sales at the very end of each quarter, which has made for hectic closings and difficulties with forecasting. Mr. Levy said the latest announcement indicates that that problem remains. Lucent's chief financial officer, Deborah Hopkins, who joined the company in April, has been doing an overhaul of internal processes. The spokeswoman said Ms. Hopkins has tightened internal processes in a way that could help prevent such problems in the future. That overhaul has gained momentum since former Chairman and CEO Henry Schacht stepped back into his old posts until a permanent successor is found for Mr. McGinn. But analysts were critical of Ms. Hopkins's potential role in the latest accounting problem. Both Ms. Hopkins and Mr. Schacht declined to comment. The $125 million revenue shortfall is a very small part of the $9.4 billion in revenue that Lucent reported for its fourth quarter ended Sept. 30. Analysts said that it's possible the restatement is the result of a relatively simple slip-up and that the company is erring on the side of caution about first-quarter projections. But in light of recent letdowns and the company's silence on the matter Tuesday, there is no way to tell how serious the problem is, analysts said. People familiar with the matter say the restatement isn't related to customers having trouble meeting their credit obligations, a problem that has affected some telecom concerns. Meanwhile, analysts said they are frustrated by the lack of detail in Lucent's announcement. "The company hasn't been clear about what their visibility issues are," said Tom Luria, an analyst at ING Barings. He said the fact that the $125 million in revenue accounts for two cents in earnings indicates that the problem probably arose with software sales, which carry very high profit margins. Lucent's shares hit a 52-week low intraday of $17.50, and were down $3.38 to $17.56 in 4 p.m. New York Stock Exchange composite trading Tuesday. For the fiscal fourth quarter, Lucent reported revenue of $9.4 billion and a loss of $225 million, or seven cents a share. Excluding acquisition-related expenses and one-time items, the company earned $600 million, or 18 cents a diluted share. The First Call/Thomson Financial consensus estimate was that the company would break even in the fiscal quarter and report earnings of 40 cents for fiscal 2001, excluding one-time items. Write to Shawn Young at shawn.young@wsj.com