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Technology Stocks : Nortel Networks (NT)
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To: pat mudge who wrote (7486)10/25/2000 12:55:04 AM
From: Ian@SI  Read Replies (2) of 14638
 
Pat,

Outstanding notes. Thanks for the effort.

I just finished listening to the call. One item that I found most interesting was in John Roth's answer to the 3rd last Q dealing with Guidance.

"We have great confidence in 30-35%. We are giving a very, very considered guidance.

Going into this year we said 21%, we blew that away growing 48% [my comment: well in excess of double the initial guidance for 2000]; for this Q we said 30-35%, we will grow by 40%+.

We continue to give you numbers that we know we can meet or beat."

So it would appear that NT has a habit of lowballing its numbers. All the same 30-35% as initial guidance for 2001 is substantially above the 21% initial guidance for 2000.

i.e. (30-9)/21 = a little better than a 40% increase in forecasted growth rate. and (35-21)/21 is a 66% increase in the first forecast of growth rate.

Absolutely stunning!

For all those eager to buy at the open tomorrow, I doubt that we'll see anything like the Instinet / Island prices, though it would be nice.

NT is traded on the TSE and the NYSE. I believe afterhours trades on the TSE are permitted only at the closing price - probably lots of willing sellers but not too many buyers; whereas NT was halted for news on the NYSE. I never did see it open, nor did I see any afterhours trades on either exchange.

With limited liquidity, a momentum player with a substantial holding who wants out before hearing the story can drive the price down significantly.

My guess is there won't be many trades tomorrow morning below 50; and it won't trade below mid 50s after the NY open. So presuming that it takes a long time to open in NY, the best price may be available on the TSE at the stroke of 9:30.

BWDIK,
Ian.
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