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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 71.08+0.1%Nov 7 9:30 AM EST
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To: Bindusagar Reddy who wrote (20879)1/21/1999 9:29:00 AM
From: Zoltan!  Read Replies (1) of 77397
 
Actually, you are quite wrong. Uninformed investors vastly overestimate the value of the LU-ASND merger, ignoring the realty in favor irrational exuberance. That will pass as eventuality becomes manifest.

Read today's "Heard on the Street". WSJ (page C1) has a great article on how LU has greatly padded its reported earnings in two ways:

!) "Investors have paid scant attention to the extent that Lucent's earnings have come, not from selling telecommunications equipment, but from the effect of the great bull market on company pension funds".

That makes LU stock far more expensive than people like you realize.

2) Lucent has used other aggressive accounting techniques which are very controversial, such as avoiding writing off "goodwill" when making purchases. Instead of that, which would reduce future earnings, LU takes them as as one-time "charges".

Finally, the LU Ascend combo will be seen far less favorably when it is realized how much overlap exists between the two and how poorly their corporate cultures will mesh. Heck, even the most exuberant LU bull must concede that Cisco will grow at least 50% faster than the LU-Descend combo and that LU has made what all can see
is a classic defensive maneuver against its much better run and far more formidable rival, our beloved Cisco .

You just gotta love the WSJ.
interactive.wsj.com
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