Lucent_Technologies

Lucent Technologies Axia College Lucent Technologies is a company who delivers the systems, software, and services that drive next-generation communications networks (Fraser & Ormiston, 2007). Lucent Technologies, who is backed by Bell Labs, use their strengths to create new opportunities for their customers, who include communication service providers, governments, and worldwide enterprises, to generate revenue (Fraser & Ormiston, 2007). This paper will address the financial statements of Lucent Technologies, any concerns that investors and creditors may have, and any additional information that may be valuable to investors and creditors. Lucent Technologies has three segments that deliver their product and services. The first segment is Integrated Network Solutions (INS). This segment deals with voice networking, data and network management, and optical networking. The next segment, which supports radio access and core networks, is Mobility Solution (Mobility). The third segment is Lucent Worldwide Services (Services), which provides deployment, maintenance, and professional and managed services in support in the the products that the company offers as well as multi-vendor networks (Fraser & Ormiston, 2007). Lucent Technologies had a decrease in capital spending between 2001 and 2003. This decrease could be connected to the deteriorating market. But things seemed to turn around in 2004, which appears to have been a profitable year for the company, leaving them with around $350,000 more in assets then they had at the same time the previous year. The balance sheet also showed that Lucent Technologies had an increase in other current assets, inventories, and marketable securities. When looking at the balance sheet for liabilities, it appears that that the company is in a better debt position in 2004 then it was in 2003. As of September 30, 2004, the company is showing $900,000 less in liabilities then it showed at the same time in 2003. This decrease is mainly from accounts payable, debt that will be maturing in less than a year, and other current liabilities. The dramatic drop in short term debt could be a sign that Lucent Technologies became more cautious with their spending after September of 2003. It appears that Lucent Technologies is making progress with the shareowner's deficit. The company was able to decrease the total shareowner's deficit by about $2,900,000, which is a significant amount. This may be a good sign to investors and possibly to creditors because in a way it shows that the company has acknowledged that there was a problem in this area and they are taking steps to address and correct this issue. While it seems that Lucent Technologies is addressing their issues and making progress in correcting them and the telecommunications market has stabilized, it seems that this business would still be a risk for both creditors and investors. The company has increased its assets, decreased its liabilities, and addressed the issue with the shareowner's deficit in 2004, but it seems the company is still working in the negative. In 2004 the total liabilities outweigh the total assets, which would be reason for concern. If the company continues on the positive trend of increasing assets and decreasing liabilities it may be of less risk to investors and creditors. Additional information that would seem to be important for creditors would possibly be how the company is paying their liabilities, such as paying them in a timely matter. Information that may be important to investors could possibly be how Lucent Technologies plans to continue to address the shareowner's deficit. Financial statements provide vital information for many users of the statements. These statements can help investors in making a sound investment and they can help creditors in making decisions with small risk factors. While it seems that Lucent Technologies fell on some hard times when the telecommunications market deteriorated, they seem to be making a comeback. The market has stabilized and Lucent Technologies seems focused on providing the products and services to meet the growing demand. If the company stays on the path it is on now they may be headed for a full turn around, in which case would look more attractive for both investors and creditors. References Fraser, L. M., & Ormiston, A. (2007). Understanding financial statements (8th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.