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Technology Stocks : Lucent Technologies (LU)
LU 2.645-0.2%11:40 AM EST
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To: Mr.Fun who wrote (7720)5/9/1999 3:32:00 AM
From: elmatador  Read Replies (1) of 21876
 
I agree fully with your assessment. I just am not too optimistic about the POTS growth overseas.

In fact digitalization is rapidly being completed in most developing countries. I believe the built up of POTS has already ended all over the world. The digitalization is most completed. Most of the non-Y2K compatible switches are being replaced this year.

In most developing countries there is huge idle POTS capacity. Mexico, from a total of 10 million lines, has 1.5 million lines in the 'wrong' place. China has about 120 million lines but only 90 million subscribers. Indonesia has 6.8 million lines and 1.6 million idle.

This happens because: they built switches but don't have funds to implement access. It was easier to get vendor financing for build switches than to build access and the buying decision was with the switching rather than with the transport or access people. Of course, one can argue that de-regulation and liberalization is fast changing this picture. But doesn't change the fact that there is not such big market outside the OECD for POTS.

CONCLUSION: As the POTS market goes down in the OECD countries, all vendors ALA, LU, NT, Siemens, NEC, Ericsson will scramble to take this market 'out there's. There will be downward pressure in prices and the margins will not be good.

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