Briefing.com: LU has bottomed
28-Sep-00 12:14 ET
Telecom Equipment : The already beaten up telecom equipment sector is under attack again today, this time its Sanford Bernstein lowering numbers. Analyst Paul Sagawa anticipates slower growth in carrier capital spending in 2001 than 2000, meaning that telecom equipment makers will see a slowdown in sales growth. Sagawa sees 2000 telecom equipment sales at an annual growth rate of over 28%, but he expects 2001 sales to slow to a growth rate of under 20%. As a result, ratings were cut for Ericsson (ERICY), Cisco (CSCO) and Nortel (NT) and revenue and earnings estimates were revised downward for Lucent (LU), Motorola (MOT) and Nokia (NOK). The already low expectations and inexpensive valuations were the only factors that saved MOT and LU from being downgraded, but Lucent FY01 sales estimates were cut from $43 bln to $40.8 bln and FY01 EPS from $1.41 to $1.34, closer to the consensus estimate of $1.32. Although the talk of a missed quarter is still very much alive on the trading floors, it looks like Lucent's slide could be coming to an end as the shares are now trading at just 24x FY01 consensus estimate, and when the Q3 uncertainty is in the past, we would be surprised to see the shares go any lower.
31-Aug-00 11:18 ET
Lucent Technologies (LU) 43 3/16 +3/16: Continuing on its quest to become known as more of a on an optical, data networking and wireless company, Lucent announced that it will spin-off all the outstanding shares of its Avaya unit to Lucent shareholders at a conversion rate of one share of Avaya for every 12 shares of Lucent. Avaya is a provider of communications systems and software for enterprises offering voice, converged voice and data, messaging etc. Another recently announced spin-off was the company's microelectronics business, which makes optical components and semiconductors. This was a coup for LU shareholders as it has the most upside of Lucent's businesses as a stand-alone company....Lucent recently reorganized its optical networking unit as part of its goal to shift away from its traditional communications equipment business and remake itself into a new-economy company serving the Internet infrastructure market. Expect many additional announcements as we expect significant changes for the better at the company as it plans to cut overhead costs, improve procurement procedures and introduce other major organizational changes in the coming months. In July, the company warned yet again that its earnings would be coming in lower-than-expected in the second half as it would be hurt by product transition issues associated with a faster-than-expected decline in circuit switching sales as well as a slower ramp up of its optical networking products. Briefing.com likes the long-term prospects for Lucent as the company is well-positioned in a fast growing market. Furthermore, the shares should trade up after the various business units are spun-off and investors can value the core business appropriately. -- Robert J. Reid, Briefing.com |
