February 09, 2001, 12:16 PM — Shares of Lucent Technologies Inc. fell steadily Friday morning on the New York Stock Exchange after a report in The Wall Street Journal said that the U.S. Securities and Exchange Commission (SEC) is investigating the once soaring networking company for possible fraudulent accounting practices.
Lucent alerted the SEC to possible irregularities in November of last year
when it first discovered problems during a review of its year-end financial
statement, company spokeswoman Michelle Davidson said Friday. As a result, Lucent
announced in December that it would adjust $679 million in revenue for the fourth
quarter of fiscal 2000. The company issued news statements both in November
and December and has been forthcoming about the matter, Davidson claimed.
"We voluntarily brought these issues to the SEC's and to the public's
attention then," she said. "This is not new."
While the company can't speak for the SEC -- or indeed confirm a probe is under
way -- Davidson said that Lucent is cooperating "voluntarily and fully"
with the agency.
"We've been in an open dialog with them since then," she said of
the November notification of irregularities.
Lucent has been contending with turmoil for months. Last October, it announced
that Chairman and Chief Executive Officer (CEO) Richard McGinn had been fired
and issued an earnings warning for the fourth quarter. McGinn's ouster came
as the networking market generally soured, but Lucent, once a Wall Street darling
and an example of the New Economy's luster, had made a series of missteps that
kept if from quickly getting key products to market.
Soon after McGinn was fired, the company announced that top management was
restructured, integrating sales and service, and that it would cut jobs. The
company last month further announced it would eliminate 10,000 jobs.
Lucent was spun off of AT&T Corp. in September 1996 and soon emerged as
a key vendor of networking and telecommunications equipment.
A spokesman with the SEC did not immediately return a phone call seeking comment.