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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (8857)	7/26/1999 6:40:00 PM
From: alias	Respond to of 21876

"We are witnessing disproportionately high buildups in balance sheet items which speak to poor operating efficiencies." I imagine the fund managers with large stakes in LU gave management a good tongue lashing over this.

To: Chuzzlewit who wrote (8857)	7/26/1999 7:00:00 PM
From: Mighty Mizzou	Read Replies (1) \| Respond to of 21876

a continuing reliance on additional debt as the company grows. This is preposterous. We just had an offering a couple of months ago that was snapped up in one day. This company is swimming in cash out the wazzoo. If it was economically feasible to use this cash for debt retirement I dont think it would take the minds at Lucent too long to figure this out. Sheesh.

To: Chuzzlewit who wrote (8857)	7/26/1999 10:07:00 PM
From: Techplayer	Read Replies (1) \| Respond to of 21876

Chuzzlewit, I have not read the financial statement carefully, but a couple of things seem apparent. If the number of days outstanding for receivables were decreased 6-8 days (I believe) from last quarter and the recievables jump 10% in a quarter where sales jumped 13%, doesn't that mean that management is becoming more efficient and wouldn't that be apparent to investors? I do not believe that this issue has lead to this decline, but who knows. Regards, Brian

To: Chuzzlewit who wrote (8857)	7/26/1999 11:12:00 PM
From: puborectalis	Read Replies (1) \| Respond to of 21876

Chuzz....why don't you contact McGinn,present him with your concerns about cash flow and await his answer on this thread.I would bet that your communique(which i know will be well written and succinct)would evoke a response....if only my other stocks acted as well as lucent over the years.

To: Chuzzlewit who wrote (8857)	7/27/1999 10:20:00 AM
From: Mr.Fun	Read Replies (1) \| Respond to of 21876

Chuzzlewit, 1. Cash flow was positive by about $220M in this quarter. Go back and combine the balance sheets from ASND and LU 10Qs for the last few quarters and you'll have a different perspective. LU's real tough quarters for working capital were Sep. and Dec. The build up slowed in March (still a tough seasonal quarter for AR) and turned positive in June. Management is guiding to big improvements in September, which will be a double digit sequential sales growth quarter. Cash flow should be a minimum of $500M positive. 2. Build-ups in balance sheet items certainly speak to capital inefficiencies, but may or may not speak to operating inefficiencies. One needs to look very carefully at why balance sheet items are at the level that they are before taking the position that the situation is disturbing. Accounts receivables - at 91 days, they are considerably better than any of LU's traditional competitors (NT=110 DSO, ALA=150DSO, ERIC=176DSO). The problem is that carriers have alot of tricks to delay paying contracts that typically run into $10s of millions over 6-12 months. It is not "channel stuffing" or "borrowing sales from future quarters". LU is not 3Com, it cannot engage in that kind of activity with its mix of products. As for inventory, almost all of LU's is WIP. Almost none of it is finished goods. When contracts take considerably more than a quarter to fulfill, rising inventories could be a sign of accelerating sales rather than deteriorating manufacturing efficiencies. In fact, LU is well regarded as a strong manufacturer with improving efficiencies, so I leave it to you to draw the inference. BTW AR increased only $280M quarter to quarter (~3%) and Inventories $500M (~12%) not the higher numbers you quoted, remember you've got to account for the addition of ASND. 3. Certainly the bears are running hard with similar, but flawed analyses. Add in the few have really bothered to understand the changing seasonality that got everyone so hot and bothered back in January. LU is trying to avoid that fiasco by getting analysts to change their outdated models now. This is a big buying opportunity, and we are raising our overweight.