Week 2 - Assignment
Axia College of University of Phoenix
“Lucent Technologies design and deliver the systems, software and services that drive communication networks for the next-generation.” (Axia College, 2007) Lucent Technologies are also backed by Bell Labs research and development. Lucent Technologies customer base includes communication service providers, governments and enterprises all around the world.
There are three segments that Lucent Technologies specializes in, Integrated Network Solutions (“INS”), Mobility Solutions (Mobility) and Lucent Worldwide Services (Services). INS is software that has a broad range and is related to voice messaging products, data and network management and optical networking. The Mobility segment specializes in wireless equipment and software to support radio access. The Services segment provides deployment, maintenance and support in their products.
In 2001 through ...view middle of the document...
Under total current liabilities the company has had some improvement sense 2003. In 2003 the total current liability for Lucent Technologies was 31% and in 2004 the total current liability was 26.3 percent. There is 4.7% less liability in 2004 than in 2003 on the common-sized balance sheet. The decrease in current liability is from accounts payable, short term debt and other current liabilities. It appears that Lucent Technologies has cut back on spending, thus making the company be less liable for short term debt. Total liabilities for Lucent Technologies have dropped significantly. In 2003 the total liabilities was 121.2% and dropped 13.1% to 108.1% in 2004. To the outside eye these might look appealing, but taking a closer look into the common-sized balance sheet it appears that there have been cutbacks on pension liabilities, post retirement benefits and other liabilities. I believe these cutbacks are also caused by the poor economy. I do not believe these cutbacks to be harmful to a potential investor.
In 2003, Lucent Technologies had 5.5% in 8% redeemable convertible preferred stock. The convertible preferred stock is no longer the case for 2004 as it is not listed.
Total Shareholders’ deficit has gone down 18.5% from -26.6% in 2003 to -8.1% in 2004. I believe this to be good news. The company has been working toward building the lack of money they have previously had and the gap is closing. The large bump in decreased deficit came from the accumulated deficit. In 2003 the accumulated deficit was -143.3% and in 2004 the accumulated deficit is -122.6. Still, the number is quit large and can cause for some alarm, but in the overall picture the company seems to be pulling themselves up out of the moat.
I think an investor would be concerned with the company making a profit, it appears that even with the economic downfall the company was still making a profit and will continue to do so. A creditor would be concerned if the company can pay their dues on time. By looking at the common-sized balance sheet, I believe Lucent Technologies capable of making payments as they do not have much current liability.
Axia College. (2007). Understanding FInancial Statements. Retrieved December 15,
2008, from Axia College, Week Two, ACC 230.