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Technology Stocks : Nortel Networks (NT)
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To: Anthony Wong who wrote (1087)9/30/1998 12:59:00 PM
From: Anthony Wong  Read Replies (2) of 14638
 
Nortel shares seen falling further
biz.yahoo.com

Excerpts:
Most analysts were unhappy with a revenue warning issued at a New York meeting with Nortel executives, despite assurances by executives that the company would still try to meet consensus earnings forecasts.

''People start asking well, how are they going to do that?'' said Robert MacLellan, an analyst with Kearns Capital in Toronto.

''Besides, you don't by high PE (price-to-earnings multiple), volatile tech stock because they're going to make their earnings through cutting costs...You buy these stocks because you expect them to make their earnings through strong top-line growth.''

Rick Hutcheon, president and chief investment officer of CentrePost Mutual Funds, said Nortel's move earlier this month to slash 3,500 jobs was a leading indicator of the warning.

''All of a sudden we now know why they chopped 3,500 jobs -- trying to prop up the bottom line,'' Hutcheon said.

MacLellan said analysts and portfolio managers were incensed by the implication in many media reports that those who attended the meeting did not understand what Nortel was telling them.

He said many in the investment community were ''livid'' with Nortel.

Kearns maintained its hold on Nortel but cut its target price to US$36 to US$40 from US$52. The brokerage also lowered its earnings estimates for 1998 to US$1.50 a share under U.S. generally accepted accounting practices (GAAP) from US$1.64.
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