In an official company statement issued on Friday, Lucent said the SEC investigation was expected after it ‘identified certain revenue recognition issues and voluntarily and immediately brought them to the SEC’s and the public’s attention.’ The company added it had been sharing information with the regulatory body since November.
The probe by the SEC’s enforcement division has focused on whether Lucent improperly booked $679m (Pounds 470m) in revenue during the year ended 20 September 2000, and how it recognises revenue on certain sales such as those made to its distributors.
Lucent said it had incorrectly overstated revenues by $125m (£88m) from total revenues of $9.4bn (£6.63bn) for the third-quarter, resulting in earnings being overstated by 2 cents per share at 18 cents.
On 31 December, the company issued a revised balance sheet, valuing shareholder equity at $50.4bn from $48.79bn as stated at the end of December.
After an external audit was conducted by PricewaterhouseCoopers, Lucent deducted $199m (Pounds 138m) in credits offered to customers, $28m (Pounds 19m) for a partial shipment of equipment and reclaimed $452m (Pounds 313m) as revenue, initially sent on to its distribution partners, but not generated from customer sales.
A spokesman for the Big Five firm said: ‘It is always our practice to fully cooperate with SEC requests for information.’
The SEC declined to confirm or deny the investigation.
Lucent shares continued to trade down today, with its stock last valued at $15.85, more than 82% down from a year-high of $72
Lucent shares fall on accounting queries
Re-issued Lucent balance sheet