An agreement with federal regulators ending a two year investigation with no penalties, an early contract agreement with unionized workers, settlement of two lawsuits and other good news in recent months have removed some key problems that have been worrying shareholders and distracting management.

 "The worst is behind thembut5 their not quite out of the woods yet." given a lingering industry slump in witch telephone companies have been buying very little equipment, said telecommunications analyst Steve Levy of Lehman Brothers. They know that they have to rebuild credibility after constantly missing financial targets until last quarter, he said.

Lucent said Thursday it has reached an agreement with the Securities and Exchange Commission resolving an investigation that began late in 2000, when Lucent disclosed it had prematurely booked $679 million in revenues in the previous quarter. Lucent notified the SEC, fired one employee and restated earnings figures.

Under the agreement which needs final SEC approval Lucent does nit have to pay a fine , admit wrong doing or make further financial restatements. The company simply agreed not to violate federal securities laws again.

Lucent Chairwoman and Chief Executive Officer Patricia Russo said the SEC agreement allows management to focus more on getting back to profitability, which she has promised by September.

"The SEC must have concluded that this was not pervasive (but) a small isolated problem" said Paul R. Brownhead of the accounting department at New York University's Stern School of Business.

Theirs just no way politically that they would give anybody a special deal simply because of voluntary disclosures," given the current scrutiny of corporate accounting practices.