NEW YORK-Moody’s Investors Service Inc. said it downgraded Lucent Technologies to “junk” status, even as the Wall Street Journal reported the U.S. Securities and Exchange Commission (SEC) has broadened its investigation regarding the vendor’s possible accounting violations.
Moody’s slashed Lucent’s senior unsecured debt rating two notches to “Caa1” from “B2” and its preferred stock to “Caa3″ from Caa1.”
Moody’s said “the severity of the decline in Lucent’s revenue base, the magnitude of its current and prospective cash burn, lack of clarity regarding the nature and timing of a rebound in revenue and . reduced liquidity sources” accounted for the cut to “junk” status.
The SEC investigation wants to determine if former Lucent board members like U.S. Treasury Secretary Paul O’Neill knew of the company’s accounting practices as they happened.
