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Technology Stocks : Lucent Technologies (LU)
LU 2.455-4.1%12:13 PM EST
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To: Mr.Fun who wrote (10654)10/25/1999 3:46:00 PM
From: Maverick  Read Replies (1) of 21876
 
ML: LU should meet or beat $0.28
Excerpt follows;
Estimates (Sep) 1998A 1999E 2000E
EPS: $0.86 $1.20 $1.55
P/E: 66.3x 47.5x 36.8x
EPS Change (YoY): 39.5% 29.2%
Consensus EPS: $1.20 $1.51
(First Call: 18-Oct-1999)
Q4 EPS (Sep): $0.21 $0.28
Cash Flow/Share: $1.38 $1.71 $2.03
Price/Cash Flow: 41.3x 33.3x 28.1x
Dividend Rate: $0.09 $0.09 $0.09
Dividend Yield: 0.2% 0.2% 0.2%

Highlights:
ú Lucent will report September quarter and
fiscal 1999 results on the morning of Tuesday,
October 26 th . In general, we expect solid
results.
ú Lucent should meet or beat our EPS estimate
of $0.28. We expect the company to report a
20% increase in revenues to $10.3 billion.
Systems for Network Operators revenues
should grow by 25% to $6.6 billion, reflecting
strength in wireless infrastructure, optical
networking and ATM WAN businesses. Each
of these businesses should increase by at least
40%. Microelectronics revenues should
increase by 20% to $970 million, while
Business Communications Systems revenues
should grow by 4% to $2.6 billion.
ú On the balance sheet, we expect DSOs to
improve to 87-88 days from 92 days, and
inventory turns to increase to 4.0-times from
3.7-times in the preceding quarter. We also
expect the reversal of reserves to diminish
significantly after this quarter.
ú The bigger question is what will be the
outlook going forward. At this point, we look
for fiscal 2000 to be strong, with revenues up
18% to $44.8 billion and EPS of $1.55. This
growth will be largely dependent on the
successful introduction of new products
including a 10 Gbps optical capability and a
terabit IP switch.
ú Our current December 1999 quarter
estimates reflect 13% revenue growth to
$11.0 billion and 13% EPS growth to $0.55.
ú Longer-term, we still expect this stock to
trade at a premium to the market at 50-times
forward looking EPS.
Merrill Lynch & Co.
Global Securities Research & Economics Group
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