******Analyst Note Summaries ************
James Parmelee, Credit Suisse First Boston
"Management Reaffirms F2000 Top- and Bottom-Line Guidance. Based on
discussions with
management, we estimate visibility to Lucent attaining our $44.7 billion
top-line and $1.52
EPS estimates is high. Not surprisingly, the key top-line catalysts include
optical networking,
digital wireless, packet systems, and communications software. We believe
that the potential
exists for upside to our $44.7 billion estimate based upon out-performance in
the fast growing
sectors we previously cited."
Mary Henry, Goldman, Sachs & Co.
"After a full day of presentations, demos and informal discussion with Lucent
management, it
seems clear that Lucent's long term position is better than ever, with an
improving position in
data and optical networking, profitable share gains in wireless business, and a
commitment to
improve the balance sheet, cost structure and enterprise business. The stock
didn't move
because investors didn't get much Dec. quarter reassurance, they had hoped for
better gross
margin guidance, and they recognize that some legacy businesses may slow
before the newer
businesses ramp. These factors may keep the stock from rising until early Dec.,
when
investors get some comfort on the quarter."
Gregory Geiling, J.P. Morgan
"The fundamental growth drivers of Lucent's business continue to remain
strong as the
industry growth rates are accelerating and Lucent's product position remains
dominant in
several strategic areas (outlined below). As a result we continue to believe the
long-term
outlook for Lucent shares remains very positive. However near-term we
continue to be
neutral on LU shares until we are able to get more visibility on the December
quarter. As we
have discussed before, the current guidance for Lucent's December- quarter
revenues remains
well below its targeted 17-20% goal (current guidance is for core revenue
growth of
mid-single digits). This extremely conservative guidance is confusing given
that management
stated that they do not anticipate any major spending shifts as a result of Y2K.
We will be
closely watching the December quarter to get more visibility on this issue."
Ted Moreau, Robert W. Baird
"Based on the strong product and market-growth prospects for Lucent, which
was re-enforced
at the analysts' conference, we maintain our ratings and core holding
recommendation on the
Lucent shares. The stock has had strong performance since our upgrade a few
weeks ago, but
strong fundamentals and recovery in the equity market, we believe, will
support further
performance in the coming months. Accordingly, we are raising our price
target from $75 per
share to $80 on a near-term basis."
Kenneth Leon, ABN AMRO
"Yesterday, management demonstrated its best in class carrier
systems--optical, wireless, access, cable telephony, and customer care. All of
these areas are growing in excess of 30%, and even the Class 5ESS(TDM
circuit switch) platform grew 30%, and the 7R/E is expected to be really hot.
So, whats the matter? The enterprise business is weak and there is no frontal
attack on Cisco Systems (CSCO-NR), but a subtle move to a virtual enterprise
strategy. New financial metrics given are mostly reflected in our model, so the
upside or earnings power of Lucent is dependent near term more on lower
SG&A and lower tax rates. Lucent remains a core investment position with an
Outperform rating."
Eric Buck, DLJ Securities
"The company expects the strong growth in optical systems, wireless,
professional services, software and microelectronics to offset slower growth
in traditional central office switching and enterprise systems. That target is a
couple of percent ahead of our longer term growth rate expectations of mid
teens growth. While both our mid teens and the company's 17-19% sales
growth forecast are impressive for a $38 billion company, we believe that
higher growth at lower multiples can be obtained from the more niche oriented
companies that are enjoying the strong growth of the optical, access or IP
switching/routing markets without exposure to the more mature
telecommunications technologies. We believe these companies, rather than
Lucent, will be gaining share longer term. If not, dinner is on us. We continue
to rate the shares market perform."
Nikos Theodosopoulos, Warburg Dillon Read
"The outlook for 2000 remains solid with top line growth likely to be in the
17%-19% range. Operating margins are also likely to expand given leverage
in SG&A and perhaps a lower R&D expense ratio. Gross margins have likely
peaked for the company. With regard to the current December quarter, the
company remained comfortable with the range of estimates on the Street. We
believe the main challenge for Lucent in the Dec quarter will be selling
software given the Y2K situation. Software sales can still be made in the Dec
quarter even if actual deployment does not take place until the March quarter.
The customer would, however, have to accept and install such software in at
least one central office prior to end of year to allow Lucent to recognize a
broader software sale across multiple central offices." |
