1. Conduct a DuPont decomposition of Lucent's ROE by quarter. What factors contributed to the differences in Lucent's performance between those quarters?

(Calculate the change in Sales, Accounts Receiveable, Inventory and Gross Margin by (same) quarter.

EXHIBIT 1 LUCENT TECHNOLOGIES Selected Earnings Per Share Data For the Quarters Ended: Dec-99 Sep-99 Jun-99 Mar-99 Dec-98 0.36 0.310 .26 0.17 0.43 0.29 0.23 0.15 0.50 (0.07) 0.02 0.03 0.02 0.02 -16.28% 6.90% 13.04% 13.33% 5.00% 0.52 Earnings Per Share Analyst Expected Earnings Per Share Difference % Surprise DOIT LUCENT TECHNOLOGIES Consolidated Balance Sheets For the Quarters Ended: Jun- Dee3 Sep An-8 Mart Deco Sep Total Ass Property & Equipment in Deferred Tesne Capital Software Development Cous Liabilities and Shareholders Equity O Payroll and Po l and Poemployment Del Maling win One Year urrent To Current Poland Power Long Terme Additional Pain Capital Owned ESOP Obligations Retained ang Accued Other Comprehensive income Los To Shareholders Equity Tot and Shareholder Ewy S18 DTS 5 36225 12.403S 30815 LUCENT TECHNOLOGIES Consolidated Statements of Income For the Quarters Ended: Jun-99 Mar- Dec-98 Sep-98 10,575 $ 9,315 220 S 9.02 $ 8.574 43274,630 Jun 18 Mar 08 Dec-97 Sep-97 9.005 $ $ Total Revenues Coul of Sales Gross Margin Selling, General and Administrative Expenses Research and Development Total Operating Expenses Operating Income Other Income (Expensel.net Interest Expen Income Before Taces income Tax Expense Net Income $ 69 "Exclude one-time events and the cumulative effect of counting changes EXHIBITS Notes to Consolidated Financial Statements Supplementary Balance Sheet Information Jun 09 Mar 09 Dec 08 Sep-08 Jun-08 Dec-99 Sep-99 Mar 98 Dec-97 Sep-07 Inventories Finished Goods Work in Process Total Inventories 3062.00 2318.00 5380.00 2946.00 2102.00 5048.00 2017.00 2262.00 5179.00 2281.00 2051.00 4332.00 1777.00 2001.00 3778 00 1578.00 1503.00 3061.00 1 504.00 1379.00 2973.00 1463.00 1411.00 2874,00 1291,00 1313.00 2804.00 1611.00 1315.00 2926.00