advalorem,
Nice to see you somewhere other than on the Value Line thread. <g>
Looks like we're on opposite sides of the fence with this one. Well, I guess that's what makes a market, now isn't it?
Let's start out with the spin-offs. Certainly this process diverted management's attention from the core products and marketing. But the up-front time investment in the spin-off process should pay some dividends down the road somewhere, as the entire process should be somewhat easier for the ME unit than it was for Avaya, which is nearly completed now.
Avaya will have some value after the spin-off. Whether or not it's overvalued remains to be seen. Once it's a separate entity, it might easily be bought out by another company attempting to break into the telephony industry. I'm not saying it will happen, merely that the scenario is within the realm of possibility.
The ME unit may also have similar opportunities after it is spun off. We'll just have to wait and see what happens.
Once these units are gone, precious management and executive time should be freed up to address the problems that exist within Lucent and within the sector.
You asked where is the catalyst to move the stock? Well, in my opinion most, if not all of the bad news has already been factored into the LU price when it was back around 41 or 42. Dropping down into the mid-30s is perceived as a bargain price for this stock. And believe it or not, LU does have amazing growth potential. Yes, it may take a management change or something equally drastic to realize that potential, but the potential is still there.
Despite what analysts are saying about the dearth of corporate spending for telephony products, I see a different situation. We are entering the 4th quarter for most companies, what I call the "use it or lose it" quarter. I'm referring to IT budgets, and presuming that a significant portion of those year end dollars will find their way into telephony products, of which LU will get its fair share.
I also don't think that interest rates have risen high enough to curtail funding of capital equipment for companies that have current needs in this area to stay competitive with their brethren.
So, I still see growth in the area as many companies will either initiate or expand their voice networks, and further attempt to integrate voice and data solutions within their working environments.
Earlier today (after I bought into Lucy), a cyber-friend (and an SI participant himself) pointed this URL out to me. I hadn't seen it earlier. After <clicking> on the link, you'll have to enter LU in as the symbol.
thomsoninvest.net
In the pie graph (at the bottom right of the page), look at the breakdown of LU buyers today. It was overwhelmingly institutional buyers that bought in today. I take that as a rather bullish sign, especially since the analysts are rather uniformly bleak regarding their views on LU recently.
Best wishes to you.
KJC |
