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Technology Stocks : Lucent Technologies (LU)
LU 2.560-0.4%3:59 PM EST
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To: HeyRainier who wrote (9208)8/17/1999 6:22:00 PM
From: hitesh puri  Read Replies (2) of 21876
 
For a Telecom/Networking company Lucent is a fine company in the sense that their Inventory and Accounts Receivables are the lowest among other competitors in that space. Ericcson has AR to the tune of 300 days !!!
There are however few significant reasons for this phenomenon :
a) These projects (Wireless networks, Optical links, Carrier Networks etc. ) are of immense scale and involve planning, equipment sales, installation and bringing up to operational level before the company can say OK and the entire payment is made.

b) International sales are huge and payment cycles over there are at least 70-90 days. (Ascend/Cascade had DSO above 70 most of the time when their Europe/Japan sales started ticking higher).

c) The systems these companies make are not PC boxes where you can snap in a Pentium III, 96 Meg DRAM, 10 Gig drive, 40X CDROM etc. and load Win98.
Their Hardware is complex but is not the gating factor. Its the customization of the software for each customer with respect to their unique network, billing system, maintenance, logging, monitoring etc.

It sounds scary at first look but you have to dig deeper. These points are always raised by Bearish Anal-cysts when they have no other ammunition and always provide a buying opportunity.

-Hitesh
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