Another shoe dropped last week for Lucent Technologies, which said it discovered a $125 million revenue shortfall for its fourth fiscal quarter ended September 30. The company had previously reported "pro forma" revenue for the quarter of $9.4 billion.
A Lucent spokesman said he could provide no details about the shortfall, which he called "a revenue recognition issue", until auditors had completed a review. Lucent said the issue would lower estimated earnings for the quarter by 11 per cent, from 18 cents to 16 cents per share.
The announcement is the latest in a round of bad news for the communications products and services giant. Last month, Lucent's board of directors ousted chairman and CEO Richard McGinn after a series of earnings disappointments that have sent Lucent shares tumbling 70 per cent since the beginning of the year. The new chairman, Henry Schacht, now 66, returned to the role he held with Lucent prior to his retirement in 1998.
And on November 7, Lucent announced a shakeup in senior management designed to "integrate its sales and service organisations and quicken the pace of decision making".
"We wanted to make this public as soon as we discovered the issue," Schacht said of the latest news. "I have asked our outside auditor and our outside counsel to assist us in doing a complete review of this and any related issues. We have also informed the [US] Securities and Exchange Commission of our efforts."
Lucent said the problem was discovered as the company was completing the final preparation of its financial statements for its fiscal year. Lucent also said it couldn't confirm its financial estimates for the first quarter of 2001.
Last month, Lucent said it expected first quarter revenue to decline about 7 per cent from the prior year.