1. Fast and Lucent With the Numbers
Forgive us for our skepticism. But occasionally we at the Five Dumbest Things Research Lab suspect the worst of the companies we write about.
Every now and then we wonder -- believe us, we feel really rotten about suggesting this -- but, yes, every now and then we wonder whether companies are -- there's no way to put it nicely -- whether they're telling fibs.
As in stretching the truth. As in lying through their teeth.
Believe us, we're ashamed to bring this up.
But bring it up we must, especially in light of
Lucent's (LU Quote - Cramer on LU - Stock Picks) announcement last Friday that it plans to cut its staff to 35,000 by the end of September 2003. The telecom gearmaker, which earlier this year announced it was cutting its workforce to 45,000 by 2002's close, now plans 10,000 more job cuts over the following nine months.
What's bugging us about this is that back in August -- nearly two months ago -- Lucent scoffed at a
TheStreet.com story reporting that these massive layoffs were in the works.
Yes, telecom reporter
Scott Moritz wrote Aug. 23 that
Lucent was preparing to cut total staff an additional 25% below the already public 45,000 target, eventually bringing total staff to between 30,000 and 35,000 workers.
Lucent's Loopy Labor Lop-Off
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Back then, Lucent issued vehement denials of this report. Lucent has "no frame of reference" to get the head count to 35,000 or below, a spokeswoman told Moritz. "To speculate that Lucent is going to cut a further 30% is ludicrous," she told AFX News. (
TheStreet.com's report, you'll recall, said 25%, not 30% -- but maybe the spokeswoman or AFX reporter got confused in the righteous heat of the moment.)
As things turned out, of course,
the report was right. The aforementioned spokeswoman no longer works for Lucent, and we didn't feel like chasing her down to ask her to explain what she meant in August.
But a Lucent spokesman this week did try to explain the company's reversal. "A lot has changed in the industry since Aug. 23," he says. "Since that story, several customers have announced further capex spending reductions totaling more than $5 billion." As a result, he says, the company is assuming quarterly revenue of $2.5 billion to reach break-even earnings per share, and is adjusting its operations accordingly.
Of course, that's what
TSC wrote in August: "With the loss of several unpopular and unprofitable products, Lucent's total sales will likely drop to a range between $9 billion and $11 billion annually, or $2.5 billion per quarter, these people say."
Let that be a lesson to you, kids. On Wall Street, nothing is true about a company until the company says it is.
George Mannes
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