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Technology Stocks : Lucent Technologies (LU)

LU 2.820

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Nov 7 3:59 PM EST

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To: Elroy who wrote (21644)	10/20/2004 6:15:56 PM
From: David Hansen	Read Replies (2) of 21876

Time to take Elroy to school... Hardly. 1. Quality of earnings stunk. They reported pro forma operating profit of $273m, and pension credit of $280m. So on a cash basis (excluding pension credit) they only broke even. In other words, their quality of earnings wasn't bad, because there weren't any earnings aside from gains on the pension plan. First, let's use the same source of numbers. See the link at the end of this message. Net income is reported at $348MM for the quarter not $273MM. For the year the numbers are $1,141MM Net income with a pension credit of $1,111MM. Now if your going to look at this fairly you need to take ALL the adjustments to net income and not just cherry pick numbers that help you form ill gotten conclusions... All the numbers give you a net cash balance for the year at $634MM. That's a $1,582MM reversal from the previous year!! Hello? Sure the pension picture will be a drag on earnings but you can grow out of this problem. Now we have guidance for 2005. So your $9BB revenue for the year becomes $9.7BB for next year. Pension credit becomes less and less an issue as you bring this forward. Dig a little here. The numbers are good. Cost of Sales around 58% of total revenues.. benchmark. 42% Gross margin - benchmark. R & D around 14%... SG&A 14%... total oper. expenses at 28%... operating income at nearly 14%.... we know there is a bigger benefit from taxes in the works... I don't get it Elroy, what's your point? 2. Mobile sales were better than I expected, but so was international. LU has a tendency to have funny accounting with their international sales, so this may be them finally able to recognize stuff they actually sold 6 months ago. That may explain the discrepancy between strong LU wireless revenues, and weak LU supply chain results. You sound like a gossiping old lady here. All the "funny accounting" is history at LU... Go north to NT for funny accounting. What are their numbers anyway? I expected better from Elroy... Link: lucent.com

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