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

To: Chuzzlewit who wrote (8972)8/2/1999 8:46:00 PM
From: Bindusagar Reddy  Read Replies (3) | Respond to of 21876
 
If LU can improve gross margins into mid 50's they can grow EPS 50% not 25-30%. Whereas CISCO with 60% gross margins has downward in margin pressure as a result of competition. You can see CISCO EPS growth lately slower than revenue growth, exact opposite with LU. As LU is selling more software and services their gross margins will climb upwards.

ANOTHER MAJOR FACTOR NO BODY LOOKS AT IS THE R&D SPENDING. LUCENT SPENDS MORE THAN ANYBODY EVERY YEAR INTO R&D which will translate to future revenues. Never understimate this aspect. LU spends 4.5 billion annually (13% of revenues) on research.LU dwarfs cisco in R&D spending. If cisco has to spend that much they will show NO earnings. R&D will put LU on top of everyone. Even MSFT does not spend this amount. If LU can improve operational efficiencies and capital deployement efficiencies, sky is the limit. Telecom revolution will give LU a great opportunity to execute well.

BR



To: Chuzzlewit who wrote (8972)8/3/1999 11:46:00 AM
From: elmatador  Read Replies (1) | Respond to of 21876
 
What will this neat picture looks like once LU's start selling more in the foreign markets than in the US? What would be made of capital efficiency once the receivables start piling up? That market share LU is getting out of the US will not come cheap. They are having to accommodate a lot of local interests to gain access into foreign markets.


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