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Technology Stocks : Nortel Networks (NT)

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To: thebeach who wrote (3584)	10/26/1999 8:55:00 PM
From: Paul Fine	of 14638

Here is my synopsis of the analysts' portion of the conf call. And Eldo, don't be so harsh with Roth re the tech problem on the media portion. There are only a few businesses that handle these types of phone conferences and 1000 participants is WAY above any historical interest in NT conf calls, I am sure. It is a nice problem to have, assuming it doesn't get repeated next quarter. In summary, 19 analysts got to ask questions; more would have if they hadn't run out of time. Some recurring themes included: 1. Differences between Canadian GAAP and the upcoming switch to US GAAP. Roth and Dunn tried every which way to tell these people that the projected 20% rev growth rate going forward was in US GAAP(which has historically been a few pts below Canadian GAAP calculations). I hope they finally got it. 2. Weakness in Enterprise sector. Both NT and LU reported flat sales here. Both blame Y2K concerns by the Enterprise sector. Roth said they aren't happy with the performance in this area, and expect a new array of products(some already announced) to help in this arena next year when the Enterprise sector rebounds. Y2K is not affecting any other parts of the business to any meaningful degree. 3.Status of Wireless business? Roth said it is growing at over 20% everywhere except Brazil. That area is holding down the overall averages for Wireless. Said if that area rebounds in 2000, it will benefit NT greatly. 4.Is Optical growth rate sustainable going forward? Roth said that he sees this area growing rapidly for at least several years. Working hard to obtain necessary quantity of components. 5. How much impact will Succession have on revs in 2000? Roth seemed to play down rev expectations on this one. Said they are in Beta trials now, and first office trials next year. Said sales will be "swapping out" with other equipment sales throughout Yr 2000. Said the beauty of Succession is it allows a customer to transition changes without wholesale equipment replacement at one time. Overall, I thought the tone was positive, the analysts were receptive and the forecasts going forward were very firm. We will just have to wait until tomorrow to see if the market agrees. Paul

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