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Technology Stocks : Nortel Networks (NT)
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To: hari t who started this subject8/20/2004 5:21:51 PM
From: Cooters  Read Replies (1) of 14638
 
Goldman lists some wireless opportunities(and concerns) for Nortel.

<snip>

NT Opportunities:

#1 Beneficiary of the 3G ramp - We estimate that Nortel has approximately 12% share in the 3G
equipment market (behind Ericsson and Nokia; in-line with Siemens) and they should continue to
benefit from the ramp in 3G network roll-outs. Further, we expect Nortel to be a share gainer at
Cingular, likely at the expense of Ericsson who currently has more than 40% share of the Cingular
GSM spend.

#2 Nortel has been gaining share in the emerging markets, most recently with an estimated $400M
contract win with BSNL in India (Nortel will supply 7M lines with Nokia to supply 4M). We
estimate that the emerging markets (excluding China) will grow 25% in 2004, before slowing to
7% in 2005. However, if subscriber growth continues to surprise to the upside, and price
reductions serve to increase MOU, we believe that traffic growth could force operators to increase
their spending plans by as much as $1B in 2005.

Issues to watch:

#1 Pricing pressure particularly in the emerging markets. We expect pricing to
remain tight given the strong competitive landscape as well as the cost advantages of Asian
vendors.

#2 We believe the US CDMA market could prove softer in 2005 as Verizon and Sprint complete
the bulk of their EV-DO roll-outs in 2004. We estimate that CDMA equipment sales account for
approximately 50% of Nortel's wireless revenues.

<snip>
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