Lucent Said It Incorrectly Reported Fourth-Quarter Results

A month after ousting its chairman, reporting a decline in revenues and barely beating Wall Street's lowered earnings expectations, Lucent Technologies (LU Quote) said Tuesday that those financial results were faulty.

The telecommunications equipment maker said it incorrectly recognized around $125 million in revenue during its fourth fiscal quarter, equal to about 2 cents a diluted share. That means the company technically missed by a penny the consensus expectation of 17 cents a share, predicted by analysts in a poll by First Call/Thomson Financial.

Wall Street obviously disliked Lucent's latest surprise. The company's shares plunged, trading down $3.25, or 15.5% at $17.69 around midday Tuesday. The stock is down more than 75% from its 52-week high reached on Dec. 9, 1999. Since then, Lucent has delivered five earnings warnings, including Tuesday's. The retroactive shortfall is the first time the company has unexpectedly missed expectations.

Lucent said its outside lawyers and accountants were reviewing the numbers. Though the incorrectly recognized revenues were reported in the fourth quarter, Lucent simultaneously announced that it could not confirm earnings predictions for the first quarter. Analysts in the same First Call poll currently expect the company to break even.

Bill Price, a spokesman for Lucent, said the company had discovered the issue while assembling its 10-K filing, a year-end report to the Securities and Exchange Commission. The company is studying "any related revenue issues," he said. The company has informed the SEC.

Representatives of PricewaterhouseCoopers, the company's accounting firm, Cravath Swaine & Moore, its legal counsel, and the SEC did not immediately return calls seeking comment.

Last month, Lucent reported revenues of $9.4 billion for the quarter and earnings of 18 cents a share on its continuing operations. That marked a 22% revenue decline despite the networking gear industry's strength. Its board ousted the chairman and chief executive Richard A. McGinn and brought back his predecessor Henry Schacht to replace him until a permanent successor could be found.

It also warned that revenues from continuing operations would fall 7% in the first fiscal quarter and said those operations would break even. Analysts surveyed by First Call/Thomson Financial had previously expected Lucent to earn 23 cents a share before charges in the first quarter.