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answered my questions about the warrants and then some, at least, according to the 10-Q that came out last week.

I've been pushing Lucent to use some of its bountiful cash to benefit shareholders. The capitalization is too darned big; there's too much stock. I thought the company should buy in the disastrous warrants, the ones issued last December for the sins of the fathers.

Instead, the company shrewdly bought back $201 million of the convertible securities that have been such a drag on the company since they were issued at the bottom in 2001. This 8% convertible preferred is a legacy piece of business that costs the company a huge amount of money and does nothing to help the current situation.

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I argued my case to buy in the warrants as forcefully as I could, stressing the psychological impact of buying in something that could be a huge overhang if everything goes well.

However, the use of the $200 million in cash to close out a big chunk of a preferred that required money out the door makes more sense, if you are trying to create long-term enterprise value.

More important, Lucent chose


to use common stock to pay off this paper. It used cash. That shows several things:

    that the solvency of this company is no longer in question; that the business itself is a good one that throws off enough cash that Lucent can afford to spend it on its own securities; and that the financial team is pretty darned savvy in its use of its hoard.

I know that Lucent's been a huge drag of a stock. All I can say after reading through the 10-Q that just came out, is bravo. Management is doing everything right in a horrid industry. When things turn, and they always turn, this will be the horse to be on. I just wish I could double down right here, at $2.63, on the darned thing.

As originally published, this column contained an error. Please see

Corrections and Clarifications.

At the time of publication, Cramer was long Lucent.

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