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Technology Stocks : Lucent Technologies (LU)

LU 2.550

-0.8%

3:59 PM EST

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To: The Phoenix who wrote (10652)	10/25/1999 2:42:00 PM
From: Mr.Fun	Read Replies (6) of 21876

Lucent has been recognizing revenues at acceptance since before either of us were born, and its customers are accustomed to the contract structure. As you can well imagine, LU gets essentially no returns of CO switches etc, as they are built to specific customer order. An order that ends without customer acceptance likely ends up in litigation or a write off depending on whether it is a customer with which LU intends to do future business. It has absolutely nothing to do with LU's confidence in its ability to deliver and install a solution. Why does Microsoft defer revenue recognition on long-term site licenses? If LU were to suddenly change its policy, it would result in a one-time HUGE quarter, for which they would likely get little credit. At the same time, receivables would rise by 20-30 days and visibility would shrink. BTW sales of professional services to carriers (inc. install/maintain) are growing faster than overall revenues with above average margins. LU sees its support services as an advantage rather than a disadvantage.

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