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Technology Stocks : Lucent Technologies (LU)

LU 2.825

-2.2%

Nov 11 3:59 PM EST

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To: Kenneth E. Phillipps who wrote (9325)	8/28/1999 8:59:00 AM
From: Zoltan!	Read Replies (1) of 21876

...There are two significant advantages to this strategy. The first is related to Cisco's recent decision to invest $1 billion in KPMG's consulting business instead of purchasing International Network Services as Lucent did. Chambers said that he'd rather make a $1 billion investment providing access to 4,000 consultants from KPMG than spend $3.7 billion for about 2,000 INS consultants while incurring other ongoing costs as well. The second advantage of partnering with KPMG is that it enables Cisco to focus on its own core competencies in data networking. Cisco competitors such as Lucent (NYSE: LU) and Nortel Networks (NYSE: NT) are what Chambers likes to refer to as "old world companies." These companies expand their businesses vertically rather than horizontally. This is generally more costly as new knowledge must be created. These costs drive down profit margins and can also lead to increased debt levels.... fool.com fool.com

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