Word: lucent
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Dates: during 2000-2009
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Employees at struggling big-name companies such as Gillette, Lucent and Campbell Soup have suffered some horrific losses in their 401(k) plans in the past few years. Dozens more plans of similar pedigree could implode at any time. Why? Too many companies have loaded their plans with too much of their own stock, leaving employees dangerously concentrated in a single security. Are you one of them...
...Which was one of the things that got Lucent into trouble in the first place. Eager to keep impressing Wall Street with steroidal growth numbers and counting all manner of nascent start-ups and emerging companies among its potential customers, Lucent apparently developed a habit over the years of goosing up its sales with so-called vendor-financing arrangements, in which Lucent would lend customers the money to buy equipment and sometimes install...
...Then there were the discounts - offering some of its biggest customers deep discounts to make purchases they might otherwise have postponed until a later quarter. This would help Lucent boost its revenue numbers in the quarter when they needed a boost; problem was, Lucent's business continue to sag, at which the discounts came back to haunt them...
...Which all led in part to December's $679 million "revenue recognition" mea culpa, in which Lucent essentially had to face the music for on-credit purchases that fell through. It was the latest in the string of earnings embarrassments for the company (though not the last - in January, Lucent reported that first-quarter sales were down 28 percent and announced a $1.6 billion restructuring charge...
...Lucent spokeswoman Kathleen Fitzgerald told the Journal it was "voluntarily and completely cooperating with the SEC" since it was first contacted in November, and has shared not only all of its findings on revenue restatements with the commission but also the results of an external audit. Company lawyers have also been regular visitors to SEC headquarters in Washington...