[Black Agnes]

What did she accomplish at Lucent?

[RC one]

In an SEC document filed just after Fiorina’s departure, the company revealed that it had $7 billion in loan commitments to customers — many of them financially unstable start-ups building all manner of new networks — of which Lucent had dispensed $1.6 billion.

Such vendor financing deals would have much the same impact on the telecom industry that sub-prime mortgages eventually had on the housing industry. In both cases public companies extended loans to customers who were gambling that the good times would keep rolling (and who were especially glad to make those bets with the lenders’ money). In both cases the loans helped puff up lenders’ short-term financial results and stock prices. In both cases the market inevitably turned and the pile of debt collapsed. (PathNet, after taking on another slug of vendor debt from Nortel, filed for bankruptcy protection in 2001 as the industry collapsed.)