Commentary on LU/ASND financing of equipment sales (from Street.com):
Lucent also said today it is bankrolling a customer, using a competitive tactic that has come under scrutiny this week on Wall Street.
In a press release today, Lucent said it will give the young wireless company WinStar (WCII:Nasdaq) $2 billion in financing over five years, though the tranches available cannot exceed $500 million at one time.
As of June 30, Lucent had offered $1.2 billion in credit to five other wireless carriers, and only $16 million had been advanced. In May 1997, Lucent offered $1.8 billion in financing to Sprint's (FON:NYSE) PCS business; on June 30, it has a drawn loan of only $62 million.
"We roll it on and roll it off," says a Lucent spokesman. He sees minimal risk. Ascend (ASND:Nasdaq) said Tuesday it took the conservative measure of writing off an $8.7 million loan to five customers in the September quarter, sparking worries about the risk of competing for the business of small, risky phone carriers. Ascend stock fell that day.
According to a source on the analyst conference call, held late in the morning, Lucent estimates its markets will grow revenue 14% next year. Lucent intends to grow faster than that, and it will have to in order to keep its stride. |
