Lucent's Ascent

Whether it's bushels of rabbits' feet or just good management, Lucent Technologies Inc. has led a charmed life. Since it was spun off from AT&T in 1996, it has been on a dizzying three-year streak, acting more like a Silicon Valley startup than a 123-year-old maker of phone equipment. Since Lucent went public, its shares soared from 13 1/2 to a high of 120 on Jan. 8. Meanwhile, the Standard & Poor's 500-stock index hasn't even doubled. Last year alone, Lucent nearly tripled shareholders' money, compared with a 29% return for the S&P 500. Says Mark Herskovitz, co-manager of the Dreyfus Technology Growth Fund, one of Lucent's largest shareholders: "The stock has been just a monster."

Until lately, that is. On Jan. 21, Lucent Chairman and CEO Richard A. McGinn reported that revenues for the first fiscal quarter had fallen well short of what Wall Street had forecast--even though profits were better than expected. Instead of $10 billion in sales, Lucent chalked up $9.2 billion. The news fueled worries that phone companies have begun to buy less gear from Lucent and others. Lucent's stock took a drubbing that day, down 7%, to 106.94, although it came back to close at 110 on Jan. 26.