Lucent shares fall on accounting queries
US telecom Lucent, once a star of the US tech market, suffered another set back yesterday, after it announced a suspected accounting irregularity in its third-quarter earnings report for 2000.
Fears that an investigation of the suspected irregularity could unveil further problems in its accounts prompted Lucent’s shares to fall 16% on the New York Stock Exchange.
‘Anything that’s not anticipated, the Street hates,’ said Elliott Hamilton, an analyst with the Strategis Group told the Washington Post. ‘There’s been so many accounting controversies in some of these stocks that nobody wants to see companies not be able to keep their books.’
Lucent said it had incorrectly overstated its 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. The mistake could have far reaching consequences as Lucent announced that there was now doubt it would hit reduced earnings targets.
The matter has been reported to the SEC and will be reviewed by Lucent’s accountants PricewaterhouseCoopers.
Lucent has taken a battering since late last year’s meltdown of the US technology sector – shares have fallen almost 80% since the collapse and the company has already announced a series of profit warnings.