LU favored over NT. 11:04am EST 30-Nov-99 Morgan Stanley\DW MORGAN ENE HLTH CMS NT LU ADI C CLX RMB
NEW YORK MORNING MEETING SUMMARY/P1
TECHNOLOGY: TELECOMMUNICATIONS & WIRELESS EQUIPMENT
Alkesh Shah/(212) 761-6554
We Favor Lucent Over Nortel
- Optical networking start-ups are doing extremely well, Alkesh said
He also commented on Nortel Networks' problems in supplying ITC
DeltaCom (see separate item below).
- Nortel (NT, $80, Outperform, target $85) is capacity-constrained, he
said
This should benefit Lucent Technologies (LU, $75.69, Strong Buy, target
$85), Alkesh believes.
- To play this, he would switch out of Nortel and into Lucent
ITC DELTACOM
(ITCD, $31, $36, Strong Buy)
US: Telecommunications Services
Peter Kennedy/(212) 761-8033
Change in Earnings Forecast
Problem Is No Obstacle to Growth; Revising Estimate
- We widened our 1999 EPS estimate for ITCD to $(0.98) from $(0.96)
We cut our 4Q estimates of revenue to $68 million from $70 million and
EBITDA to $8.1 million from $9.1 million.
- ITCD said delays from Nortel Networks (see item above) may hurt 4Q
results
- This shipment delay issue is temporary and supply driven, in our view
We continue to expect 2000 revenues of $362 million and EBITDA of $57.7
million.
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