Lucent Denies Bankruptcy Talk
Lucent Technologies Inc., the biggest U.S. maker of telephone equipment, denied speculation Wednesday that it would file for bankruptcy protection after its shares fell as much as 30% early in the day.
“The rumors that Lucent is filing for bankruptcy are baseless and irresponsible,” Lucent Chief Financial Officer Deborah Hopkins said in a statement. “Our $6.5-billion lines of credit provide the financial resources and the financial flexibility to execute our turnaround plan.”
Lucent’s cash holdings plunged 60% to $1.5 billion on Feb. 16 from $3.8 billion on Dec. 31 after the company posted its first loss amid a slowdown in spending by telecom companies. Lucent has since raised funds with the spinoff of its Agere Systems unit, but the total raised was much less than expected.
Shares of the Murray Hill, N.J.-based company closed down $1.10, or 14%, at $6.75 in heavy New York Stock Exchange trading after sliding as low as $5.50. The stock, once as high as $77, is below the company’s initial offering price: The former AT&T; unit first sold stock in April 1996 at $27 each, or $6.38 on a split-adjusted basis.
Standard & Poor’s has Lucent’s debt under review for a possible cut to junk status. Moody’s Investors Service has a negative outlook on the company. It doesn’t have the debt under review. Lucent has $3.71 billion of debt, with $750 million coming due on July 15, according to Bloomberg data.
Lucent has vowed to cut 16,000 jobs, close factories and sell businesses to trim costs and restore profitability. The firm has cut forecasts for four of the last five quarters as demand for older phone equipment slowed and Nortel Networks Corp. and other rivals beat Lucent to market with new fiber-optic gear.
Hopkins said in the statement that Lucent is “already seeing positive impacts from our comprehensive restructuring plan.”
The company plans to report its progress later this month. In the period ended Dec. 31, Lucent had a loss from operations, its first, of $1.58 billion, or 47 cents a share.
