From the time this former AT&T unit had its initial public offering in April 1996, this stock seemed to move ever higher. At one point, in December 1999, it was trading for more than $63 a share.

That was as high as it got, according to the Bloomberg stock-tracing service. A few months later, the bubble in tech stocks started to burst, and Lucent stock started to tumble. Earlier this month, it was trading for as low as $1.50 a share. It closed at $2.10 yesterday.

So how could it happen? And what do you do if you own Lucent today? Those are among the issues a man from Kingston raised in a recent question to MoneyLine. I don't usually focus on individual stocks, but Lucent is so widely held and the stock has been so popular that this seemed an appropriate exception:

Q: How can a company like Lucent, with all its technology back-up in Bell Labs, go from $70 down to $1.50 range on the stock exchange, be on the top 15 favorite stock list for weeks -- months -- and have such a performance?

-- L.A., Kingston

A: Lucent (NYSE: LU), a maker of telecommunications equipment, software and other items, got caught up in the tech-stock bubble. Investors once bid up the price of its shares aggressively; now they're hammering the stock.

The company, based in Murray Hill, N.J., was once the hardware manufacturing operation of AT&T, which spun it off in 1996 and is one of the reasons the stock is held by so many investors.

The company makes switching and transmission equipment, fiber-optic gear and wireless systems and software, according to Hoover's Company Profiles, published by Hoover's Inc. of Austin, Texas. Many of its products are developed by its Bell Laboratories research and development unit.

Lucent had massive debt and went through a number of restructurings, laying off workers and closing and consolidating facilities.

It also had a management team that was "not particularly progressive," said Donald J. Sowa, former president of the Rhode Island chapter of the Financial Planning Association, a trade group for financial planners and others.

That has changed, and the company now has "good fundamentals," but it has been punished by investors, Sowa said. "Here's a great company that's a terrible stock," said Sowa, a Certified Financial Planner licensee and head of Sowa Financial Group Inc. of East Providence. However, "Right now, we're in the tail end of a bear market, and people are selling everything," often for no sound reasons.

Sowa said he sees a consolidation developing in the telecommunications sector. "Lucent will either be left standing or will be acquired," he said. At that point, investors who stick with the company should see a premium for their shares, he said.

So what should you do? If you're a long-term investor -- as individual investors should be -- hold tight and see what happens, especially if you hold your shares inside an IRA or other such tax-sheltered account, he said.

If you hold your shares in a taxable account, consider selling them to lock in a tax loss (which you can use to help offset any gains in your portfolio, and/or offset ordinary income -- within limits -- for tax purposes), he said. Then buy them back (make sure at least 31 days have passed, to avoid tax trouble), Sowa said.

Whatever you do, don't expect the stock to return to its 1999 high point, said Jordan E. Goodman, author of Everyone's Money Book (Dearborn; 970 pages; $30), a best-selling guide to your money matters.

Goodman even recommends dumping the stock under certain circumstances, in part because some of Lucent's high-tech customers have fallen on hard times.

He cited "massive overcapacity" in the telecommunications and technology sector, something that must be wrung out of the system over time before the sector can bounce back. So short-term investors should consider selling, longer-term investors should consider holding, he said.

"If you need the money in two to five years, sell, or [hold] only a minimum amount," he said. If you have more than five years before you'll need the money, consider holding. But don't plan on the stock returning to its glory days, Goodman said. "It's not going to come back to $60 -- ever. I would go that far," he said.

The Value Line Investment Survey, a respected monitor of stocks, said in a recent report that Lucent's losses should narrow in the future, partly because the company has cut thousands of jobs and has taken other steps to sharply lower its costs.

"Still, barring a dramatic turnaround in the service provider market, a return to profitability is not likely prior to the second half of fiscal 2003," the report said.

"Risky Lucent shares are not worth considering at this juncture. We advise investors to defer commitments until visibility improves markedly."

When it comes to individual stocks, remember, too, that the stock market, at its heart, is driven chiefly by two main things: greed and fear. When stock prices were soaring in the late 1990s, delivering far greater returns than they have historically, the market was being driven mainly by greed.

Now the process has reversed; stock prices are being pushed lower mainly out of fear. It's anybody's guess where this will end, so hold on tight.

NOTE TO READERS: MoneyLine will return on Tuesday, July 30, after a brief vacation.

Neil Downing is a Journal staff writer and author of The New IRAs and How to Make Them Work for You. Questions about your money matters? Call us at 1-401-277-7484 and leave a message. Sorry, no personal replies; as many questions and issues as possible will appear in this column.