No thanks to an accounting error in a week for thanksgiving, Lucent Technologies Inc.’s bleeding continued as it withdrew its projected fourth-quarter sales by $125 million, triggering a 14-percent share tumble.
The premier telecom equipment maker’s latest misfortune, slicing profits by 2 cents a share, was unveiled as it put finishing touches to financial statements for its fiscal year.
“We wanted to make this public as soon as we discovered the issue,” said Henry Schacht, Lucent’s chairman and chief executive officer. “I have asked our outside auditor and our outside counsel to assist us in doing a complete review of this and any related issues.”
The company said about $125 million may have been improperly recognized during the quarter, ended Sept. 30.
The news sent its already-fragile stock downhill on Nov. 21 by $3.08 to 17.88, its lowest in more than a year. This trumped analysts’ expectations that the company would break even in the fourth quarter.
It had previously predicted revenues of $9.4 billion, or 18 cents per share.
The company said it has notified the Securities and Exchange Commision of the error and it could not confirm its guidance for its fiscal first-quarter 2001.
Profit targets this year have consistently eluded the Murray Hill, N.J.-based company, which has had a rough-and-tumble year with a 76-percent dip in its stock fortune.
The 1996 AT&T spinoff took off to a promising beginning, riding robust stocks and earning blue-chip status early on Wall Street.
The stock hit a high of $84 last December inspiring optimism that was tortured a few weeks later by a profit warning about first-quarter earnings.
This uncertainty forced the board of directors late in October to replace Richard McGinn with Henry Schacht as the comapany’s chairman and chief executive officer, after the company reported a 22-percent drop in fourth-quarter profits.
Part of the company’s challenges come from more innovative competitors like Nortel Networks and Cisco Systems, which have advanced new Internet speed and optical-networking technologies.
The company indicated earlier in the month that it could reduce its work force by 10 percent or by about 10,000 jobs as pasrt of the overhaul of its operations.
Its outside auditor is PricewaterhouseCoopers and its outside counsel is Cravath, Swaine & Moore.
The latest bad news made Merrill Lynch change its rating from “accumulate” to “buy” and its earnings estimate from 65 cents a share to 20 cents a share.
