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Lucent settles suit; shares edge up

The maker of gear for telecommunications networks settles class-action shareholder lawsuits and expects to take a $420 million charge in the second quarter.

Shares of Lucent Technologies rose in a down market Friday, after the company announced it had settled class-action shareholder lawsuits against it for $420 million.

Lucent's shares edged up by 2 cents, or about 1.35 percent, to $1.50 in morning trading. The markets, meanwhile, were down across the board.

Under the settlement, which marks an end to one chapter in Lucent's troubled history, the telecom networking gear maker agreed to pay $315 million in cash, stock or a combination of both. The company will also pay an estimated $100 million in warrants and $5 million in administration costs to process the claims.

As a result, Lucent expects to take a charge of $420 million, or 11 cents a share, in the second quarter.

In addition to Lucent's settlement, the company's insurance carriers have agreed to contribute $148 million in cash toward the settlement fund. And Lucent will also seek to recover up to $70 million from its insurance carriers to offset its own contribution.

The global settlement resolves 54 separate lawsuits against the company and its current and former officers and directors. The company does not admit to any wrongdoing.

"This settlement puts all pending shareholder and related litigation behind us. By resolving these legacy issues, we can put all our energy into running the business and continuing to rebuild shareowner confidence in the performance of this company," Lucent CEO Patricia Russo said in a statement.

Back in October 2000, Lucent ousted its former chief executive, Rich McGinn. Then later that year the company issued a restatement on its fourth-quarter results because of accounting errors and issued a first-quarter warning that would miss analysts' estimates by a sizable margin.

The company later became the subject of a Securities and Exchange Commission investigation over accounting irregularities, but it announced last month that it had reached a settlement with the SEC.