Lucent targeted by SEC

February 9, 2001: 12:28 p.m. ET

Telecom equipment maker says it's cooperating with accounting probe

NEW YORK (CNNfn) - Lucent Technologies is cooperating with a Securities and Exchange Commission investigation of possible fraudulent accounting practices during its last fiscal year, the company said Friday.

The SEC probe is focusing on whether Lucent improperly booked $679 million in revenue during its 2000 fiscal year, the Wall Street Journal reported Friday, citing unnamed sources with knowledge of the case.

The SEC currently is looking into Lucent's procedures for booking sales, specifically its use of "nonrecurring credits," or one-time discounts given to customers, as well as its accounting treatment of software licensing agreements, the Journal reported.

Lucent (LU: Research, Estimates) in December adjusted its revenue statement for the fiscal fourth-quarter, deducting the $679 million, after its own investigation.

"We said in November, we wanted to make this information public as soon as we discovered the issue," a Lucent spokesman told CNNfn. "We voluntarily brought these issues to the SEC and the public's attention. We have been freely and fully sharing information since then."

"When we started the conversation in November with the SEC, we fully expected that they would look into this matter fully and completely," the spokesman added.

Shares of Lucent, which have been on a steady downslide since last summer, were down $1.93 at $14.96, an 11.4 percent decline in New York Stock Exchange Friday. Over the past year, Lucent's shares have underperformed the & Poor's 500 Index by about 70 percent.

The December restatement by the telecom equipment maker, once a high-flying spin-off of AT&T (T: Research, Estimates) and a Wall Street darling, further dampened already-flagging investor confidence after Lucent warned several times on earnings throughout 2000.

John Hynie, an SEC spokesman, declined comment on the newspaper's report. He told CNNfn that the commission does not comment on investigations, or possible investigations.

PricewaterhouseCoopers, which is the company's auditor, also declined comment.

"As a matter of course, if the SEC is to ask for information and documents on any matter, we will provide them," said Steve Silber, a spokesman for the accounting firm.

On top of earnings warnings, Lucent has faced job cuts, profit shortfalls and product development missteps in the past year.