Tonight's news, headed by excellent numbers out of Agilent:
yahoo.cnet.com
cnetinvestor.com
biz.yahoo.com
During the fourth quarter, orders from Agilent's communications and electronics businesses rose 32 percent. Net revenue for these businesses increased 59 percent compared to same period last year. These businesses comprise about 80 percent of the company's orders and revenue.
Growth in communications and electronics was driven by the continuing progress of network-equipment manufacturers, component manufacturers and service providers to build the next-generation communications infrastructure. Revenue growth was very strong for electronic-manufacturing test, optical-component test, system-on-a-chip test, wireless and fiber-optics test, and communications-test solutions. Revenue growth also was strong for components in wireless, fiber optics, networking and imaging.
biz.yahoo.com
Nortel (NYSE:NT - news) (Toronto:NT.TO - news), which will host an investor conference in Boston on Tuesday, said it expects its 2000 revenues and earnings from operations to show growth in the low 40-percent range. It expects its optical Internet revenues to grow more than 125 percent in 2000 to more than US$10 billion.
thestreet.com
biz.yahoo.com
From WSJ:
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November 20, 2000
TIP SHEET: Monument Telecom Fund Manager Likes Optic CosBy JOHNATHAN BURNS Of DOW JONES NEWSWIRESNEW YORK -- It's been a rough year for telecom, and no one knows that as well as a telecommunications fund manager.But Michael Gallipo, who manages Monument Fund Group Inc.'s telecommunications fund, takes comfort in the fact that the market has become discerning.Why is that important? Because through early 2000 - before the springtime plummet of the Nasdaq - investors were betting that all telecommunications companies would be winners. Valuations across the board went through the roof.However, faster than you can say "irrational exuberance," investors began treating all telecommunications stocks as losers.But now some sanity has returned to the sector as the valuations of some carriers and equipment makers have risen, Gallipo said, while others continue to lag.In picking his stocks, Gallipo has relied on a couple assumptions. First, he thinks that concerns over a decrease in network spending are overemphasized."We're still confident that you are going to see aggressive network buildouts in the next year or two, both in wireline and wireless," he said.While many telecommunications carriers have recently said their capital spending in 2001 will be flat or barely above 2000 levels, Gallipo thinks the companies are just being conservative."These companies traditionally underestimate what they are going to spend," he said. "You probably have a lot of that going on. A lot of these companies are also becoming capital-constrained, and the last thing they're going to do is get up and say 'We're going to spend 'X' amount and we're proud of it.' "But spend they will, Gallipo said. He expects that the Federal Reserve will probably ease up on interest rates in the first part of next year, which will free up additional capital."That should release some of the pressure on carriers," he said.And even if the telecommunications carriers' spending estimates are on target - which recent history would seem to contradict - spending will likely be concentrated on growth areas.Who stands to benefit?Gallipo's top holdings show he's banking on ADC Telecommunications Inc. (ADCT), Cisco Systems Inc. (CSCO), Nortel Networks Corp. (NT) and Powerwave Technologies Inc. (PWAV)."ADC is probably my top pick on the equipment side," Gallipo said. "They have a diversified customer base. They have very strong product lines across broadband - fixed wireless and cable - and a very strong fiber optics business.""Nortel is still in my top 10, as well as Cisco," Gallipo said. "But you have to ask, is this a stock that can triple over three to five years? ADC has a market capitalization of $15 billion. Cisco has a market cap of $377 billion. Intuitively, ADC's (market cap) is much more likely to triple."Gallipo is also bullish on wireless, and he likes handset maker Nokia Corp. (NOK).Nokia leads the industry in handset sales and margins. The company recently let handset margins slip in a concerted effort to gain even more market share, a strategy Gallipo approves of.He doesn't believe that investors should extrapolate from recent weakness at L.M. Ericsson Telephone Co. (ERICY) and Motorola Corp. (MOT) that there is something wrong with the wireless market."The struggle at Motorola and Ericsson isn't a result of the market," he said. "Nokia is confident they'll get margins back above 20%. That we're moving to more of a replacement market in mobile phones is a positive trend. Your number of new users will slow down, but people will be buying the higher-end phones with more functions."And as expensive auctions for wireless spectrum have shown, carriers will invest heavily in updating their networks for next-generation services.That will benefit companies like Powerwave, which sells power amplifiers that go into cell phone base stations."As the need for power goes up on these networks, the demand for power amps goes up," Gallipo said.As for the service providers, Gallipo favors SBC Communications Inc. (SBC). It is the only Baby Bell stock he owns."I think they are the most entrepreneurial of the Bells," he said. "They were the first to announce a plan to roll out digital subscriber line services. When they did, the market punished them. From my perspective, I thought it was good. It showed that they get it."As an international player, Gallipo picks Vodafone Group PLC (VOD), the mobile giant of the world with 65.5 million proportionate customers, which includes stakes in subsidiaries and associates."They have a very dominant franchise around the world," he said.
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Corba says as much in explaining Pimco's results: "We had no exposure to the Internet bubble. We had no exposure to long-distance telephone stocks and no direct exposure to personal computers." That spared the funds from successive waves of selling that struck those segments this year. But look out when the Nasdaq bear comes scratching at the door to get at your cherished stocks. To have ridden tech without getting routed through the third quarter could only mean one thing: "We were hiding out in fiber and storage," says Corba. Fiberoptic equipment producers like SDL and Nortel Networks and data storage names like EMC provided the last refuge of technology-addicted growth managers -- until, in the last couple of months, that shelter began to leak and wobble as well amid slower industry growth projections. Corba isn't unduly concerned by the recent market action, though he notes that in Pimco Growth he ratcheted technology exposure down from around 50% near Labor Day to 40%. He also takes comfort in the sizable stake in blue-chip financial names that have served the fund well, among them AIG and Citigroup. But ultimately, count Corba among the faithful who believe that beyond the current "valuation correction" in tech, the brisk earnings growth rates of the stars who brought us Nasdaq 5000-Cisco, Nokia, EMC and the like-will dazzle investors anew. |
