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Technology Stocks : Nortel Networks (NT)

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To: The Phoenix who wrote (9412)	1/24/2001 1:09:20 PM
From: Stock Farmer	Read Replies (1) of 14638

Gary - Read NT's reports. They define what "Enterprise" customers are versus what "Carrier" customers are. Allow me to shout in a most undiplomatic way: "ENTERPRISE" means something different to NT than you think it does. TO NT, "ENTERPRISE" IS A CUSTOMER CLASSIFICATION. TO MOST OF THE REST OF THE PLANET ENTERPRISE MEANS "DATA NETWORKING PRODUCTS"! When Nortel sells products to a major university, it books this as "Enterprise" revenue. When it sells products to Bell Atlantic it books this under the "Carrier & Service Provider" segment. Forget paper clips and milk. Where do you think a sale of a centrex line card gets booked? Well, if it goes into a M100 on a university campus, it gets booked as "Enterprise" revenue. If it gets sold to Bell Atlantic it gets booked as "C&SP" revenue. If NT sells a network gateway to Bell Atlantic, where do you think this gets booked? Under "Enterprise"? No. Under C&SP. If it sells that same gateway to a university, it would get booked under Enterprise. This makes perfect sense because of how Nortel is organized. Nortel is CUSTOMER oriented, not PRODUCT oriented. They sell SOLUTIONS to CUSTOMERS and book revenue based on CUSTOMERS. So this recognition policy makes complete sense. You are hung up on a definition of Enterprise that means "Data Networking Equipment". But whenever you see "Enterprise" in a Nortel report you should substitute the phrase "Customer that is not a Carrier or a Service Provider". So there is no way you can successfully extrapolate whether Nortel is gaining or losing share of the data networking equipment market by zooming in on what they report as "Enterprise revenue". Apples & Oranges. Now, it may ALSO be true that Nortel is not maintaining share in the data networking market. But that would be coincidental to the reported growth in sales to non-carrier customers. My point remains: Nortel uses a different definition of the word "Enterprise" than you folks in the bay area are used to. Maybe it's a Canadian thing. It sure makes for some great confusion (hence this series of posts). I'm just trying to clarify. Still confused? John.

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