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Case
| HBS Case Collection
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2007
(Revised from original 2006 version)
Revenue Recognition Problems in the Communications Equipment Industry
by
Paul M. Healy and Arjuna J Costa
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Abstract
Designed to explore recognition issues in the context of a potential market downturn. In late 2000, Lucent Technologies reports multiple revisions to its recent financial results due to revenue recognition problems, leading to a dramatic decline in its stock price. This disclosure comes in the wake of a period of spectacular growth for the communications equipment industry during the 1990s. From the perspective of a securities analyst covering the industry, are the troubles at Lucent indicative of larger revenue recognition issues throughout the industry? Facilitates a discussion of potential early warning signs of the risks faced by Lucent's competitors.
Keywords: Corporate Disclosure;
Revenue Recognition;
Policy;
Supply and Industry;
Performance;
Communications Industry;