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Technology Stocks : Lucent Technologies (LU)
LU 2.730-0.5%Nov 13 3:59 PM EST
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To: Mr.Fun who wrote (12260)1/8/2000 11:35:00 AM
From: Clay Takaya  Read Replies (1) of 21876
 
Mr. Fun,

I also hope that you will post your full LU post-announcement evaluation on this board in spite of the volume of ugly and useless messages that are showing up here . I know a lot of people here appreciate your comments.

According to Rich McGinn at the CC, the problems appear to be in 3 major areas:

1. Optical - Manufacture of DWDM 80-channel w/OC-192 interface could not scale up to demand and customers put DWDM purchases on hold or went with NT (64-channel w/OC-192?) rather than go with the 16-channel product.

2. Software sales - Appears to be related to your reported 500 million sale. Here McGinn said that software customers were "aggressively negotiating" contracts which jives well with the blackmail angle of the story.

3. Network deployments - LU was not able to close contracts with several large customers which really highlights Gary's point about the weakness of revenue recognition based on customer sign-off. In some instances, McGinn said that customers were already receiving revenue from the installation, but had not yet accepted the network.

On a positive note, here is what I heard:

1. Sales of DWDM products was up over 100% YoY and could have been much, much more if LU had been able to execute.

2. Ascend sales are up over 50% YoY which makes me think that NN is going to be hurting (again) at its next earnings announcement.

3. Although wireless was flat YoY, it is due to the huge Saudi GSM rollout last year which skewed the numbers. Sales are expected to increase over 20% for the entire year.

Any meaningful comments on the above would be greatly appreciated from anyone.

Clay
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