Thread,
Some general news on networkers. Interesting about the mention of Sanmina in the first article. Then look at what Sanmina actually said (second clip below). Looks like Nikos didn't do his homework well.
Plus the Reltec announcment isn't exactly a "data networker." I can't argue that Ciena wasn't a "warning," but it wasn't like AT&T or Digital Port completely canceled orders. They just plan on giving them to someone other than CIEN. So I don't quite understand what this analyst's concern is? But I have to admit, I don't know the exact Latin American exposure of the networkers in general. That may or may not be a real problem.
NT is reducing it's workforce, but it just merged with Bay. I thought one reason for any merger, was to reduce redundant overhead. NT has 72,896 employees. Maybe they needed a little trimming? 3,500 jobs appears to be huge, but is 4.8% of the total. Not a lot considering the merger.
I don't mind general downgrades at all, but IMHO, this wasn't based on strong facts.
MikeM(From Florida)
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Lucent dips on analyst's comment on telecom sector
NEW YORK, Sept 15 - Increased concerns about the outlook for 1999 earnings in the telecommunications equipment sector pushed shares of Lucent Technologies Inc. LU down by about five percent on Tuesday, analysts said. Shares of the Murray Hill, N.J.-based company fell 4-1/8 to 73-1/8 on volume of 9.5 million late on Tuesday.
The drop followed a report by Nikos Theodosopoulos, telecom equipment analyst with Warburg Dillon Read, which warned that uncertainty about South American and Asian markets are weighing on the sector's outlook.
"The likelihood of Asia and South America experiencing a difficult 1999 is creating uncertainty on 1999 estimates for the group and may require Europe and North America to be strong to offset weakness in emerging markets," the report said. expressed optimism about its performance at a Nationsbanc Montgomery Securites conference.
Theodosopoulos' report noted that other players in the industry may already be adjusting their forward strategies. For example, Northern Telecom Ltd CA:NTL NT on Monday said it would cut 3,500 jobs, or about 4 percent of its global workforce. "A major reduction like this ... reflects a more prudent level of spending given the organization of the company and perhaps a more cautious view on emerging markets," the report said.
Other signs that industry concerns are increasing include the recent lowering of current-quarter earnings expectations from Sanmina Corp. SANM , RELTEC Corp. RLT and CIENA Corp. CIEN , the report said.
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Sanmina Reports Preliminary Fourth Quarter Results
Company Continues to See Solid Demand for its Contract Manufacturing Services; Product Shipment Delays Impact Expected Revenue and Earnings
SAN JOSE, Calif., Sept. 2 -- Sanmina Corporation SANM today reported preliminary results for the fourth quarter ending September 30, 1998. As a result of product shipment delays that have been deferred into future quarters, fourth quarter results will be lower than previous estimates. Management is confident of its future growth prospects, and, as previously stated, expects year-over-year growth of fiscal 1999 revenues and earnings of approximately 30%.
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Northern Telecom to take Q3 provision
TORONTO, Sept 15 - Telecommunications equipment manufacturer Northern Telecom Ltd. CA:NTL NT said on Tuesday it will take a provision in the third quarter to cover a plan to cut 3,500 jobs across the company's 80,000-strong global workforce.
This will be offset somewhat by a gain on the sale of Entrust Technologies Inc., the electronic communications security firm specializing in encryption technology that was spun off by Nortel in August. There may also be a gain on the $325 million sale of Advanced Power Systems to London-based Astec Plc , signed last month, but this depends on when the transaction closes, Janacek said.
The company earlier this month closed its acquisition of Internet technology firm Bay Networks for $9 billion.
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