Lucent Technologies Inc has completed its first year as an independent company, and according to CEO Richard McGinn, We’re continuing our journey into discovering how to be a good company. Fourth quarter net losses were $597m including a $945m write off of in process R&D from the recent purchase of Octel Communications Inc, while revenue grew by 17.2% at $6.93bn. Excluding the massive Octel acquisition charge, which continues the US trend for vastly inflated R&D write offs, Lucent is claiming a fourth quarter earnings growth rate of 44.7%. But the figures also include some classic mixing and matching of dubious over provisions and spontaneous asset write-offs. The fourth quarter saw the reversal of $133m of provisions originally made for future restructuring charges in the split from AT&T. According to Lucent, staff have been so ingenious at finding jobs to do elsewhere in the business, that redundancy charges haven’t materialized, boosting the bottom line by $133m (with further potential for more reversals in 1998). This has been offset, amazingly, by a one-off asset write down of $127m associated with equipment at Bell Labs, Lucent’s research arm. The net effect allowed Lucent to cruise in a healthy 6 cents above the consensus of analysts estimates at $0.57 per share (before Octel related charges) and the stock continued its irresistible rise. McGinn may be on a journey of discovery, but his company knows how to talk to Wall Street.
