Lucent stock price drops amid SEC probe

(Telephony) Lucent Technologies’ stock price fell more than 11% by midday Friday following news of a formal Securities and Exchange Commission investigation of possible fraudulent accounting within the company.

The SEC’s enforcement division reportedly is investigating whether the telecommunications equipment maker improperly booked $679 million in revenue during its fiscal year 2000.

A Lucent spokesman said that the company has been in an open dialog with the SEC since November and is cooperating fully with the commission’s efforts. "The SEC has made no charges of any kind against Lucent," he said.

“From our point of view, there’s no new news here,” the Lucent spokesman said. “We aired out these issues back in November, voluntarily brought these issues to the SEC and to the public's attention and we’ve been sharing information with them since then.”

Lucent issued a statement Nov. 21 that it had identified an issue that would impact $125 million of revenue for the fourth quarter 2000 that ended Sept. 30. The company estimated the finding would have an earnings per share impact of 2 cents for the quarter and the year.

“We wanted to make this public as soon as we discovered the issue,” Lucent Chairman and CEO Henry Schacht said in the statement released in November. “I have asked our outside auditor and our outside counsel to assist us in doing a complete review of this and any related issues. We have also informed the Securities and Exchange Commission of our efforts.”

On Dec. 21, Lucent released the complete findings of its revenue review. In its restatement, the company deducted $74 million for verbal agreements on customer credit, $28 million for incomplete equipment shipments and $452 million for reclaimed products from distributors that had not been sold to end users.

The $125 million deduction was said to be a result of a Lucent employee using misleading documentation in offering customer credit in connection with a software license. The accused employee was fired.

“We said, ‘Let’s take the most conservative posture, write it off and start with a fresh slate,’” said a Lucent spokesman. “We fully expected after contacting the SEC, given this information, that they would want to look into this matter thoroughly, and that’s what they’re doing.”

A spokesman with the SEC said commission staffers are not authorized to comment whether there is an ongoing investigation.