Article Review Essay Example | Topics and Well Written Essays - 750 words - 3

Article Review - Essay Example But finally, despite its efforts, Lucent Technologies faced serious charges under the Securities Exchange Act, 1934. Thus the article necessarily analyzes the damage control or recovery measures that the CEO of the company took at a later stage to improve the performance afterwards. Starting from 1966 Lucent became one of the global leaders in its concerned industry (telecomm). They manufactured products used for constructing copper line transmissions and switching, wireless and optical gear and other communications networking infrastructure. Due to the great range and demand of the products manufactured, the financial performance of the company was quite good. It had been one of the investor’s choices until January 2000 when Lucent declared that the revenue of the first quarter of the financial year 2000 would be lesser by 20 percent when year on year comparison is made. The financial analysts felt that though the company was lagging in the innovation part, competition had very little to do with its financial downfall. It was a case where the company intentionally misinterpreted its accounts to misguide the investors for investing in their stocks. (â€Å"The Lucent Accounting Scandal†, 2005) The SEC charged Lucent for its misinterpretation of the accounts as a result of which the investors were misguided. The company intentionally made false and overstated forecasts, which attracted many investors at once. But eventually the company made contradictory statements revealing their true financial position. Meanwhile many investors had actually invested huge amounts in the shares of the company. According to the federal law, showing inflated profits and making unrealistic forecasts in order to mislead investors are serious legal violation, which the company was ultimately alleged with. (Barnes and Bowers, 2007) Eventually the company failed to co-operate with Security Exchange Committee, and the later probed into the accounting