Lucent TechnologiesLucent Technologies Case
Lucent Technologies is a company that is backed by Bell Labs research and development who, according to Fraser and Ormiston (2007), “design and deliver the systems, software and services that drive next-generation communications networks” (p. 79). The company has three reportable segments, including Integrated Network Solutions, Mobility Solutions and Lucent Worldwide Services and all three of these segments have suffered from the 2001 decline in the telecommunications market. According to the consolidated balance sheets, Lucent Technologies suffered a decline in their cash and receivables between the years 2003-2004, but overall their total assets showed a profit at the end of September 2004 and their current assets are almost half of their total assets. This shows that the market might be bouncing back and stabilizing and will hopefully see an improvement.
Lucent Technologies saw a decrease in their current liability, going from 25.6% in 2003 to 24.3% in 2004, which shows they have the ability to pay off their short term debts. Their debts did increase, which would indicate Lucent has more long term debt. Because of the market shifting, Lucent most likely thought it necessary to pay longer on their assets, but that could be a risky move to shareholders. Hopefully management is right and the need for telecommunication equipment is growing so the company can decrease their long term debt and make their debt structure more appealing to shareholders and investors.
The stockholders equity increased a small amount from 2003 to 2004, but the equity is not very high, which will be concerning to potential investors. This balance sheet does not give too much information for an investor to make an informed decision and additional financial documentation would be necessary. Financial reports from when the business was turning more of profit would benefit an investor so they could see the potential and possible impact their investment could...