Lucent dips about 5 % on analyst's comment on telecom sector
biz.yahoo.com
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Tuesday September 15, 5:25 pm Eastern Time
Lucent dips on analyst's comment on telecom sector
NEW YORK, Sept 15 (Reuters) - Increased concerns about the outlook for 1999 earnings in
the telecommunications equipment sector pushed shares of Lucent Technologies Inc.
(NYSE:LU - news) 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.
The report noted that the uncertainty has resulted in new lows in the companies' price-to-earnings multiples, with most stocks in the
group trading at under 20 times estimated 1999 earnings -- except for Lucent and Cisco Systems (Nasdaq:CSCO - news) Inc.
''It's a negative report on the whole group, but Lucent, which has the highest P/E is taking the brunt of it,'' said one technology
stock trader.
However, traders said Lucent 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 (Toronto:NTL.TO - news) 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. (Nasdaq:SANM - news), RELTEC Corp. (NYSE:RLT - news) and CIENA Corp. (Nasdaq:CIEN - news), the
report said. |
