Lucent reported more bad news today, saying it has “identified a revenue recognition issue” that may cause the vendor to trim its previously reported revenue for the fourth quarter by $125 million and its earnings by 2¢ a share. The vendor also said it could not confirm financial guidance that it previously gave for the first quarter of 2001.

The news dropped Lucent shares another 15% to $17.88 by noon EST. Lucent shares are off about 75% since January, amid a management shakeup and the company’s failure to meet sales targets for optical networking gear. Merrill Lynch downgraded Lucent this morning, changing its long-term rating to “accumulate” from “buy” and cutting its fiscal 2001 earnings estimate to 20¢ a share from 65¢ a share.

“We wanted to make this public as soon as we discovered the issue,” said a press statement by Henry Schacht, chairman and chief executive officer of Lucent. Schacht said the company’s auditor PricewaterhouseCoopers and outside counsel Cravath, Swaine & Moore had been called in to do a complete review. According to Lucent, the problem was discovered as the company was in the final preparation of its financial statements for its fiscal year.

Five days ago, Lucent announced changes to its financial organization, including the naming of Mark White, formerly vice president of planning and business analysis, to the position of senior vice president and corporate controller. White reports to CFO Deborah Hopkins, who joined Lucent in late April.

For the fourth fiscal quarter ended Sept. 30, Lucent reported $9.4 billion in revenues and 18¢ a share on continuing operations, compared to $768 million, or 24¢ a share in 1999.

For the first quarter of 2001, Lucent previously projected a 7% decline in revenues from continuing operations. Analysts surveyed by First Call/Thomson Financial were estimating that Lucent would break even on a per share basis for the quarter.

Until the review is completed, the company said that it would have no further comment.