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Technology Stocks : Lucent Technologies (LU)
LU 2.495-2.5%10:45 AM EST

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To: The Phoenix who wrote (10656)10/26/1999 9:27:00 AM
From: Lerxst  Read Replies (1) of 21876
 
Hi Gary,

Just curious if you've ever had the opportunity to tour a CO and see a 5ESS installation?

I got just such a chance about 2 years ago and toured a local Bell Atlantic CO here in MA. The CO had recently (within a few years) been converted over to a 5ESS from an ancient switch (I want to say 1ESS, but that doesn't sound right).

In touring such a facility, it is overwhelming to contemplate the complexity involved of terminating 10's of thousands of twisted pair lines within the facility and then subsequently connecting all these wires to the rows and rows of cabinetry that makes up the 5ESS. This is an older CO (as most are here in MA) and only a small percentage of the connections come in on fiber, most connections come in via big cable bundles (seem to recall they were about 6-8 inches in diameter, maybe 2500 pairs per).

In any case, my point here (if I actually have one :-) is that the installation of such a switch is an enormous task, so LU's policy of recognizing revenue upon acceptance does not surprise me one bit. Also, keep in mind that it's not just physical installation, but all of the software configurations for phone numbers, services, exchange routing, etc. All take time to get setup and operational in order to transition paying customers over to the new switch. If you think about all of the new dialing capabilities we have: 10-10 dial around, selected long distance, 800/888, 911, etc, it's a ton of complexity. Think of it more as final HW and SW QA/Test occurring at the customer site, than at LU's mfg facility.

I would liken this scenario to that of building a house. Revenue isn't recognized/collected until the house is complete, approved for habitation and the "keys" are handed over to the owner, not when the lumber is delivered to the site.

Regards,

Lerxst
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