Less than a week after Lucent Technologies Inc. announced it had trimmed its fourth quarter revenue by US$125 million, a New York law firm said it has been retained to commence a class action suit against the telecommunications giant, alleging it provided investors with false and misleading information on its financial results for the three month period.
The complaint would be filed in the U.S. District Court for the District of New Jersey and would allege that former Lucent Chairman Richard McGinn was motivated to cause the Murray Hill, New Jersey company to report inflated revenue and earnings in an attempt to maintain his position in the face of escalating investor dissatisfaction, the law firm of Kirby McInerney & Squire LLP said in a statement. No suit had been filed as of Monday, said Gretchen Becht, a paralegal for the firm.
Lucent spokeswoman Michelle Davidson said the company does not comment on pending litigation.
Lucent announced on Nov. 21 that it had revised its revenues by $125 million and shaved its earnings per share by 2 cents for the quarter ending Sept. 30, 2000. At the time, Lucent said it had discovered "a revenue recognition issue," prompting the downgrading. A revenue recognition issue refers to how and when a company reports revenue, according to those familiar with the situation.
McGinn was ousted in October after Lucent failed to hit its earnings mark five quarters in a row.
Shares of Lucent traded down 12 cents or .68 percent to $18.12 a share in morning trading Monday.http://www.lucent.com/.