9-107-025 REV: AUGUST 23, 2007 PAUL HEALY Revenue-Recognition Problems in the Communications Equipment Industry On November 21, 2000, Lucent Technologies announced that it was revising its fourth-quarter results as a result of revenue-recognition problems discovered by its auditors during the year-end financial review. The revision lowered revenues by $125 million and earnings per share by 2 cents from 18 cents. In response, Lucent’s stock price fell by 16%, to $17.56. One month later, on
Revenue-Recognition Problems in the Communications Equipment Industry 1) In late 2000, Lucent announced that revenues would be adjusted downwards by $679m as a result of revenue recognition problems. Yet the firm’s market capitalization plummeted by $24.7bn. Why do you think the market reacted so negatively to Lucent’s announcements of the problems? The large drop in market capitalization is probably due to several factors. Historically, Lucent had successfully met analysts’ projections for
firm is likely to face revenue recognition problems? Revenue recognition issues are the subjects of headlines in our daily newspapers, primarily because major corporations have recognized revenues that did not meet its revenue recognition rule. For businesses that use cash basis accounting, revenue recognition is a simple process; a sale equals revenue, but not for companies that use accrual basis accounting. The more complex the business, the more specialized the industry, the more difficult the
Systems (2005 – 2007) Document Owner(s) Elvira Solanes, Keith Allen, Sachin Yadav,Vijay Shankar, Xiaochen Wu Table of Contents Introduction 3 Company Overview 3 Financial Summary 3 Product Lines 4 Routing 4 Switching 4 Enterprise IP Communications 5 Security 5 Home Networking 5 Optical Networking 5 Storage Area Netwroking 5 Wieless Technology 5 Social Responsibility 5 Corporate Governance 6 Reporting Strategy 6 Organization Structure 6 Operating Environment 7 Risks 8 Legal
government, in return, agreed to lift the constraints of the 1956 agreement. E. Sociocultural The sociocutural issue is related to the legal issue in this case. The battle AT&T faced had been up against the U.S. government on the antitrust. Another problem AT&T faces is on innovation. AT&T focused only on the telephone services for over a century until the late 90s. That was when AT&T started a series of joint adventures and acquisitions to broaden the company's competitiveness in broadband, cable TV
Technologies, Inc.—Revenue Recognition Lucent Technologies designs and delivers networks for the world’s largest communications service providers. Backed by Bell Labs research and development, Lucent relies on its strengths in mobility, optical, data and voice networking technologies as well as software and services to develop next-generation networks. The company’s systems, services and software are designed to help customers quickly deploy and better manage their networks and create new, revenue-generating
CHAPTER 1 OVERVIEW OF FINANCIAL REPORTING, FINANCIAL STATEMENT ANALYSIS, AND VALUATION Solutions to Questions, Exercises, and Problems, and Teaching Notes to Cases 1. Value Chain Analysis Applied to the Timber and Timber Products Industry. Exhibit 1.A below contains a depiction of the value chain. The links in the value chain are as follows: 1. Timber Tracts: Plant and maintain timber tracts (Weyerhaeuser) 2. Logging: Harvests timber (Weyerhaeuser) a. Sawmills:
the cost of semiconductors continued to decline their applications in consumer electronic products increased and created a major new market. Motorola responded with a full line of low-cost plastic-encapsulated transistors. The entire semiconductor industry eventually adopted these devices’ design. In 1967 the company expanded its global presence by adding six plants internationally (citation needed). NASA’s lunar roving vehicles used Motorola’s FM radio receivers 100 times more sensitive than any
Inventories have been valued $871 million, an increase of $150 million from last year. This can be viewed in a multitude of ways. Caterpillar may be expecting larger sales volume, and are trying to compensate. Caterpillar could have inventory control problems. Usually, inventory increases are viewed as a negative with a company that should be in theory practicing a just in time approach. Cash Cash on hand is $398 million. This is only a $110 million increase from December 31, 1999. This means
initial investment required. This analysis will show how the VoicePredict product will be successful in market penetration. COMPANY DESCRIPTION TravellingWave develops software, using voice recognition technology, for entering text into mobile cellular devices. The technology combines voice recognition with keystrokes or touch gestures, to accelerate text input resulting in