Don't hit that panic button yet!!!
The CEO expects approximately 20%(!) growth for 1999, earnings estimates for the 3rd
quarter to be in line with earlier estimates, and they are gaining marketshare from their
competitors. No doubt somebody screwed up at the analysts meeting, however, I wouldn't
be so quick to lynch Nortel executives when the fault could very well be attributed to not
so bright, but vocal (hard of hearing??) analyst or two or... Emotions are running so high
right now that this stock may get hit a bit more tomorrow morning but smart investors will
soon figure out that this report is not at all similar to Alcatel's and considering the 1999 look
forward comments, was even much more positive than the Tellabs preannouncement.
As for those with a long-term perspective (an extinct breed??), other points to consider
are:
Lucent is an extraordinarily well run company but they as of yet do not have as complete
a data product line as Bay's (the extremely popular 450 switch for instance). Lucent has
made many aquisitions of some great companies but it will take them some time to
seemlessly integrate them all with the appropriate network management software (e.g. Bay's vastly
maturing Optivity NWM software). Nortel also is by far the leader in supplying equipment
to the extremely fast growing CDMA communications market. As for Cisco, another
extraordinarily run company, they do not yet come close to offering the product line that
Nortel does on the tele side of the business. I know there are a lot of Bay haters out there
but for what it's worth, I still believe that David House saved Bay from extinction by
rebuilding Bay's management team, making some very savvy aquisitions, and refocusing
their product line - all in less than 2 years time. Once he realized, no matter how superior
he made Bay's product line, he was not going to be able to penetrate deeply entrenched
Cisco accounts, he had the intelligence to quickly market his company to a major
telecommunications manufacturer knowing that this was the only way he would be able to
participate in the massive build-out of the worlds communications infrastructure. He was dealt a
very weak hand but has played it masterfully so I say it's a mistake to count him out when
it's only about the 3rd inning.
The fact is is that Nortel - with their enviable worldwide customer base and currently most
complete tele & data product line, has an excellent window of opportunity to gain tremendous
marketshare. The PLANET is now the marketplace thus there will be plenty of business for
Nortel, as well as for Lucent and Cisco, in regards to building/rebuilding the worlds
communications infrastruture. I feel sorry for the non-aquisitioned 3COMS; Ascends;
NewBridges, Cabletron's, Alcatel's, Sieman's, etc for I truly believe that in the end, there
will be left standing only 3 communications conglomerates with Nortel being very well positioned to be one of them.
For those who are interested, I am President for a network integration company
specializing in infrastructure design, consulting, and project management.
Patience will be rewarded.
JP |
