The Securities and Exchange Commission is formally investigating the accounting practices at Lucent Technologies Inc. in order to determine whether the telecom equipment company committed fraud, according to The Wall Street Journal.

The SEC is specifically interested in whether Lucent improperly booked $679 million in revenue during the 2000 fiscal year, which ended Sept. 30, says the paper.

You might recall that back in December the company restated the same amount of revenue after conducting its own investigation.

At the time, Lucent deducted $199 million in credits offered to customers, and $28 million for a partial shipment of equipment. The company also took back an additional $452 million in revenue it had sent to its distribution partners but never actually sold to end customers.

According to the Journal’s account, the SEC is investigating Lucent’s procedures for booking sales, especially its use of “nonrecurring credits,” or one-time discounts, given to customers, as well as its accounting treatment of software-licensing agreements.

The SEC is also looking at how Lucent recognized revenue on sales to its distributors, who may not have sold the products, a practice known as stuffing the channels, says the paper.

The Journal also says the commission is examining the company’s use of revenue targets for fiscal 2000.

“We are voluntarily and completely cooperating with the SEC,” Lucent spokeswoman Kathleen Fitzgerald told the newspaper.

Fitzgerald told the paper that Lucent initiated contact with the SEC on the morning of Nov. 21, just before it first publicly revealed some of the problems. Since then, Lucent has shared all of its findings on revenue restatements with the commission, she told the paper.

The SEC has also requested documents from Lucent’s customers and independent auditor, PricewaterhouseCoopers, according to the Journal.

O’Neill Says Economy Not Growing

Treasury Secretary Paul O’Neill said on Thursday that he agrees with Federal Reserve Chairman Alan Greenspan–The U.S. economy is barely growing.

“At the moment, I agree with Alan Greenspan. I’ve looked at the data with Alan and I think we’re hovering around the zero rate of growth, I would say someplace between minus 0.5 and plus 0.5, in that range,” O’Neill told the PBS television show Newshour with Jim Lehrer.

As a result, a tax cut would stem the economic decline, he added. However he insisted that President Bush’s tax cut proposed is not directly tied to the economy’s currently shaky condition, given that it was proposed during the economic boom.

What’s more, he thinks the biggest boost to the economy will come from technology-led productivity, which is largely credited for fostered the recent economic expansion.

“I believe we have only realized maybe 20 percent of the productivity that we’ve seen in the last five years,” O’Neill said. “So I think we have this prospect out in front of us of a period of prosperity that’s unprecedented in the world and is going to throw off a lot more money than what we’re currently estimating.”

He added, “I really do believe that we have in front of us a continuation of what we’ve had, the beginning of a golden era of economic prosperity.”

KPMG Consulting’s Shares Soar 30 Percent on First Day

KPMG Consulting’s IPO was a big success.

The 112.5 million shares were priced at $18 apiece, the top end of its estimated price range of $16 to $18.

They then soared more than 30 percent to close at $23.48, as more than 89 million shares changed hands.

KPMG Consulting’s shares were strong right from the start, opening at $20.44.

A lot hinged on this IPO, since it’s the first high-profile company to go public so far in this otherwise lousy year for initial public offerings.

Morgan Stanley Dean Witter led the IPO.

As recently as the beginning of January, the company had hoped to sell 354.6 million shares at between $6.75 to $8.75. That offering would have valued KPMG Consulting at roughly $4.45 billion.

In other IPO news

• Seattle Genetics Inc. on Thursday raised the estimated price of its planned IPO to $11 to $13 per share from $10 to $12 each. The company, a cancer-fighting drug discovery company whose backers include Microsoft Corp. co-founders Bill Gates and Paul Allen, expects to offer 7 million shares of its common stock. It now expects to net about $77 million in proceeds, up almost 8 percent from $70.8 million the company thought it could fetch when it set terms in early January.

• Reuters Group PLC said Thursday that its Instinet electronic- brokerage subsidiary has filed with the Securities and Exchange Commission for an initial public offering. It expects the offering on the Nasdaq to be completed by the middle of 2001. Following the IPO, Reuters said, it will continue to hold a substantial majority of Instinet’s common stock. Instinet Group LLC filed to sell up to $450 million of common stock. The number of shares and estimated price range weren’t disclosed.

• Oil States International Inc., which provides products and services to oil and gas drilling companies, lowered the price range for its initial stock offering for the third time on Thursday, to $9-$10 per share from $11-$13. It will also offer fewer shares — 10 million, down from 14.6.

• National Media Technologies Inc. said it is withdrawing its planned IPO due to market conditions. The company provides business-to- business Internet professional services including securities compliance filings, website development, preparation of electronic brochures, interactive multimedia presentations and virtual tours.

Federated to Close Stern’s Division

Federated sometimes seemed like it more resembled auto behemoth General Motors.

Like its Detroit counterpart, Federated has a number of divisions that seem very similar to one another.

While GM has Chevrolet, Buick and Oldsmobile, Federated on the east coast has Bloomingdale’s, Macy’s and Stern’s.

Now, just as GM is planning to close down its Buick division, Federated has announced that it will shut down its Stern’s stores.

It will convert most of the stores to Macy’s and Bloomingdale’s, eliminating about 2,600 of the division’s 7,400 jobs in the process.

Federated said it plans to convert 19 of Stern’s 24 stores, which are all in New York and New Jersey, to Macy’s and Bloomingdale’s. The other five Stern’s stores will be closed and sold.

The move is intended to strengthen Macy’s and Bloomingdale’s in their home markets, according to a spokesman.

The shutdown of the Stern’s retail group will cost $130 million to $150 million.

Today’s Layoff News

• Yahoo is about to lay off 15 percent of its employees, according to a website that tracks these kinds of developments at Internet and tech companies.

• The same website also reported that Rare Medium just laid off around 80 people.

• Motley Fool Inc. laid off 115 people, or about one third of its staff. In addition, the company cancelled one of its newest business initiatives, SoapBox.com, which allows individuals to post and sell original research about stocks and other topics.

From the CFO.com “Brief” Case

• The Federal Trade Commission has requested further information from PepsiCo Inc. and Quaker Oats Co. regarding PepsiCo.’s planned acquisition of the food and beverage company. The government’s biggest concern is that the transaction would put the valuable Gatorade brand into the PepsiCo portfolio, which already includes All-Sport, the No. 3 sport-drink brand, with a 3 percent share, compared with 83 percent for Gatorade and 12 percent for Coca-Cola’s Powerade. PepsiCo has already gone on record as saying that it is willing to shed All-Sport if regulators insist it do so.