Seen

Lucent

(LU)

lately? Barely a month after the Street tenuously fell back in love with the company, following its announced plan to spin off its slowest-growing businesses, the honeymoon appears to be over. Lucent's stock, which soared on the news to a high of 73 1/2 in early March, now wallows at around 59 -- off 20% in recent days.

The latest hit came Friday, when

Lehman Brothers

analyst Steven Levy issued a report suggesting what some skeptics thought in the first place: that the proposed spinoff is little more than window dressing to distract investors from the real issues.

The real issue, according to Levy, is the issue that got Lucent into hot water in the first place: Its balance sheet. Short-sellers had been arguing the company's balance sheet (high receivables and inventories) would one day get it into trouble. That's just what happened in early January, and the news caused Lucent's stock to drop in a vacuum (losing 28% in a single day).

Levy's significance, in the scheme of things, is that he had been one of only two analysts who were Lucent contrarians until last November, when he

threw in the towel, boosting Lucent to a buy rating. (Lehman has no investment banking relationship with Lucent.) Adding insult to injury, he actually

raised

his first-quarter estimates in January only hours before Lucent lowered the boom and warned of lower-than-expected first-quarter earnings. (Lucent's first quarter ended Dec. 31.)

The sandbagged Levy responded by immediately downgrading the stock to neutral. But his latest report, coming after a month's analysis of the company's first-quarter 10-Q, is noteworthy because it's always worth paying attention when an analyst re-raises the red flag. "We continue to believe that the problems that led to the disappointing first quarter ... have not abated," he says.

More to the point, Levy believes:

While the total amount of receivables over the past two quarters has fallen by $950 million, days outstanding of receivables -- the length of time customers are taking to pay -- is rising. Rather than the 95 days pegged by most analysts (based on stated receivables), Levy thinks it's closer to 112 days. In addition to pure receivables, he includes receivables that have been factored, or sold to a bank, as well as guaranteed debt that has been sold. (This is all part of helping finance customer purchases.) The combo, he believes, "is the most accurate measure of how much credit Lucent is affording its customers, because it is significantly more comprehensive and reflects all types of customer credit."

(I'd like to add a side note here: The issue of factoring, in general, can be a tricky area. By selling off receivables -- usually at a discount to their full value -- companies get cash. That's good, and so is the fact that the receivables, the amount owed by customers, are off the company's balance sheets. So much for deadbeat accounts, right? Not necessarily. Keep an eye on whether the receivables can be put back to the company; you'll know that because the company will disclose in the

Securities and Exchange Commission

filings that they were sold with "recourse." That's the case with Lucent, which says in its latest 10-Q that the most recent sale of receivables -- all associated with one customer -- has "limited recourse." Lucent, however, believes most of its liability associated to these receivables has been eliminated. It adds that the creditworthiness of that unnamed customer "is excellent.")

The spinoff won't be all it's cracked up to be for two reasons: First, it won't occur until the end of the this fiscal year, ending in September, so the benefits won't be recognized until the next fiscal year. Second, after the spinoff, "it appears that most of the balance sheet issues that are our primary concern should remain a part of the new Lucent."

Lucent's guidance for Wall Street for this year is likely to be "overly aggressive." An overriding reason is the lack of credibility, which has bagged analysts twice: in January 1999

and

January 2000. "Therefore," says Levy, "even with the company's insistence, as recently as last week, that there was no need to change its guidance for the March quarter (expected to be released April 19) or the fiscal 2000 year." Levy says he'll believe it when he sees it.

For good reason.

Kid's Play

This twist to

Cramer's

comments this morning on

4 Kids Entertainment

(KIDE)

, which holds licenses to much of the Pokemon craze: His kids (and his personal trainer) like the company because they are enthused about 100 new Pokemon characters that could spark new sales of cards.

Well, my 10-year-old son (as good a barometer as Cramer's kids) has been bugging me for two months to let him sell his cards on

eBay

(EBAY) - Get Report

or at the local card store. (He got

that

from his friends, who are chatting about doing the same thing.) They've tired not only of the fad, but of being forced to shell out upwards of $15 for a pack-o-cards. (At that price my wallet doesn't budge the way it did when they sold for a few bucks.)

After reading JJC's comments today, I asked him for his assessment. "Dad," he said, "Pokemon is dead."

That's my boy!

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.