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Technology Stocks : Lucent Technologies (LU)

LU 2.520

-1.4%

3:59 PM EST

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To: hdl who wrote (21415)	10/30/2003 8:45:02 PM
From: John Soileau	Read Replies (1) of 21876

HDL, The value would be a multiple of the income provided by the patents. IMO the multiple will be well less than that used for a permanent asset (like an office building), since patents do expire. A multiple of 12 would be unthinkable; it's all opinion, but even a multiple of 8 x annual income would be very rich IMO for an income stream that will over time decline and terminate. I could see an investor paying at most 5 x annual income for a package of income-producing patents sold off by LU. Which is why I doubt you'll see any such package sold off. While expensive annually, Bell Labs is still a pretty nice asset, since it continuously produces a high rate of patents, and therefore potential income streams. IMO, in the past, this revenue potential has not been properly managed and maximized. LU has been great at generating idea, but crappy at getting idea to dollar as a driving business objective. GE knows how to do that well, but (unfortunately!) GE doesn't run LU. John

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