Lucent Shares Down on Rumors of SEC Probe

Lucent Technologies Inc. shares fell 5% on Friday amid speculation that the leading phone-equipment maker is being investigated by the Securities and Exchange Commission, analysts said.

Lucent (ticker symbol: LU) dropped $2.88 to $53.38 on the New York Stock Exchange, its lowest close since March 15.

But the Murray Hill, N.J.-based company denied that it’s the target of a probe by the SEC or any regulatory body.

“We’re not aware of any such inquiry,” said spokesman Jeff Baum.

Lucent has been criticized by some analysts for the amount of receivables on its balance sheet, pension over-funding and how it used a restructuring fund established during its 1996 spinoff from AT&T; Corp. (T). Lucent said Jan. 6 that its fiscal first-quarter profit fell far short of analyst expectations and that sales were flat from a year ago.

“The magnitude of the warning raises a red flag,” said Donaldson, Lufkin & Jenrette Securities Corp. analyst Eric Buck, who had heard speculation that Lucent is under SEC investigation.

However, Buck said he knows of no evidence to suggest Lucent is being investigated.

The warning has brought many of the concerns--ignored while Lucent was beating profit estimates--into focus, said DLJ’s Mike Geran.

The stock is now 37% off its recent high, and down 29% this year.

Critics have charged that past earnings were artificially high because of money paid back to Lucent from the restructuring fund; that Lucent was able to boost earnings by making fewer contributions to over-funded pension plans; and that Lucent sold receivables to third parties to improve the appearance of its balance sheet.

Lucent will report earnings on Jan. 20. Profit was 36 cents to 39 cents a share, the company said last week. Before the warning, analysts had expected the company to earn 54 cents, the average in a poll by First Call/Thomson Financial.

A year ago, the company earned 48 cents a share.