Shares of Lucent Technologies fell steadily Friday morning on the New York Stock Exchange after a report in The Wall Street Journal said that the US Securities and Exchange Commission (SEC) is investigating the once soaring networking company for possible fraudulent accounting practices.
Lucent alerted the SEC to possible irregularities in November of last year when it first discovered problems during a review of its year-end financial statement, company spokeswoman Michelle Davidson said Friday. As a result, Lucent announced in December that it would adjust $US679 million in revenue for the fourth quarter of fiscal 2000. The company issued news statements both in November and December and has been forthcoming about the matter, Davidson said.
"We voluntarily brought these issues to the SEC's and to the public's attention then," she said. "This is not new."
But that didn't stop the company's stock price from being pounded. Shares closed on Thursday at $16.89, but dropped with the opening bell Friday and continued the decline through the first hours of trading. At 11am, the share price was down to $15.17 after starting the morning at $15.85. The low for the day hit $15 during early trading. Shares have traded as high as $70.66 in the last 52 weeks and as low as the $12.19, recorded on December 12.
While the company can't speak for the SEC -- or indeed confirm a probe is under way -- Davidson said that Lucent is cooperating "voluntarily and fully" with the agency.
"We've been in an open dialogue with them since then," she said of the November notification of irregularities.
The Journal article quotes "people with knowledge of the investigation" saying that the SEC is focusing on the $679 million and is investigating how the company booked sales, particularly regarding one-time customer discounts, and how it handled software licensing deals.