I heard on CNBC that a class actin suit had been brought against Lucent because they failed to notify their shareholders that they were having problems that would adversly affect their earnings. They did issue an earnngs warning, but apparently not soon enough. I have no indication that this is directly related to Y2K, but it should serve as an incentive for publicly traded companies to disclose any serious operational or computer problems when they become aware that earnings will be effected.

-- Dave (dannco@hotmail.com), January 14, 2000

Answers

First of many, I should think.

-- Earl (earl.shuholm@worldnet.att.net), January 14, 2000.

Unlike, say, Intel, poor ol' Lucent finally ran of accounting moves and had to own up to this recent low earnings number. They'd been playing games for the last few quarters and some analysts had recently started warning that Lucent wasn't looking as strong as their "guidance" suggested. Guaranteed to annoy stockholders like nothing else.

-- DeeEmBee (macbeth1@pacbell.net), January 14, 2000.

Heh, conspiracy sites predicted this MONTHS ago, planned failure so irridium could go for a song. Whatever.

-- Hokie (Hokie_@hotmail.com), January 14, 2000.

Pardon? What does Lucent have to do with "irridium"?

If you're talking about the now-bankrupt "Iridium", that was primarily a joint venture between Motorola and a Japanese keiretsu, wasn't it?

-- DeeEmBee (macbeth1@pacbell.net), January 14, 2000.

I just saw on another forum that a big part of Intel's earnings increase was due to option trading (primarily writing of puts). If true, it is almost criminal that the financial press is not reporting this.

-- Dave (dannco@hotmail.com), January 14, 2000.

Dave -

Not a big part (approx. 7 cents/share), but just enough to put them well over the top of the number they needed. It appears that this is part and parcel of current earnings reporting from a lot of techs, especially some of the real high-flyers. It's not hidden from the analysts, but neither is it being highlighted.

It's also not illegal, just a bit unusual and "off"; investment income has very little to do with whether the company is being successful in its core business operations. A few analysts commented that they were surprised at how much investment $$$ Intel ended up claiming for 4Q, but it looks like no one will complain too much as long as stocks keep climbing. If they start dropping, expect some analysts (and possibly shareholders) to break out the sharp knives.

-- DeeEmBee (macbeth1@pacbell.net), January 14, 2000.

Note that I was referring to earnings INCREASE, not total earnings. $.07 would have been comprised a majority of the increase. Also, I did not mean "criminal" in a literal sense. What is so deceiving about this is that the analysts readily discarded a charge to earnings, but were unwilling to take out the positive contribution due to stock trading when they calculated operating earnings.

-- Dave (dannco@hotmail.com), January 15, 2000.