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

To: William Hunt who wrote (10524)	10/22/1999 11:16:00 AM
From: Bindusagar Reddy	Read Replies (2) \| Respond to of 21876

If he started coming out and make any comments positive or negative without earnings report, people will misinterpret anyway. He knows that earnings will take care of the stock price. You can not worry about day to day fluctuations caused by manipulators. Smart money knows that company is doing great. It is the nervous nellies whose long term is few days are the ones that are leaving. I belive lot of folks that are selling are the ones who bought in anticipation of earnings. SInce there is no movement, they are dumping. These are not what you call smart money. BR

To: William Hunt who wrote (10524)	10/22/1999 11:25:00 AM
From: Clay Takaya	Read Replies (2) \| Respond to of 21876

Bill, No offense, but I think you are dead wrong in your analysis of how McGinn is handling the situation. In Q2 he came out and preannounced and what did we get: nothing. Preannouncing can only make an earnings upside anti-climactic and dilute the updraft that will certainly occur when the shorts have to cover and the longs jump in to make the shorts miserable. If LU announces to the upside, I believe that Rich has handled this situation exactly right and that we will see a fireworks show. If LU comes up short, what could he have said? If shareholders start to make these kind of demands on the leadership of corporations, we might as well hire politicians to run our companies. Clay

To: William Hunt who wrote (10524)	10/22/1999 11:57:00 AM
From: Thomas M.	Read Replies (2) \| Respond to of 21876

The valuation discrepancy between CSCO and Lu is not as big as you make it out to be. I see CSCO's PE at 70 (fiscal year ending July '00), and LU at 45 (FY September '00). Tom

To: William Hunt who wrote (10524)	10/22/1999 1:18:00 PM
From: Maverick	Respond to of 21876

Valuation comparison among NW/telecom equip supliers The Canadian Dilemma Investors should also be aware that Nortel now represent in excess of 10% of the Toronto Stock Exchange (TSE) 300 index. This makes it difficult for Canadian Funds to overweight the stock as many funds cannot hold more than 10% of their funds in any one company. We would also point out that because Nortel is also 38% owned by BCE the actual impact on the TSE index is even larger. Valuation As Table 1 shows, Nortel is trading just under 2 times its growth rate for 2000 and our new estimate for 2001. This is in-line with other large equipment stocks. We remain comfortable up to US$60 which is 50 times our 2000 estimate. Table 1: P/E Valuation NT = US$52 Year EPS (US$) Current P/E EPS Growth P/E/G Ratio 1995A $0.39 135.1 1996A $0.54 97.2 39% 1997A $0.65 80.0 21% 3.7 1998A $0.81 64.2 25% 2.6 1999E $0.98 53.0 21% 2.5 2000E $1.20 43.3 23% 1.9 2001E $1.45 35.9 20% 1.8 As table 2 below shows, Nortel is now trading at a premium to Lucent. We think this reflects Nortel?s recent product and contract momentum, however it may be an issue that prevents further multiple expansion. Nortel continues to trade at a price/sales discount to Lucent and a significant P/E and P/S discount to Cisco. Table 2: Telecom Equipment Comparables Value P/S P/S Proj. Recent Market Calendar P/E Last Qtr. Trailing Growth Ticker Price ($mln) 1998 1999e 2000e Ann. 4Qs Rate Cisco CSCO $65.69 226,688 99.5 76.4 58.1 16.0 18.7 30% Lucent LU $56.13 154,041 57.9 43.8 33.8 4.1 4.4 20% Nortel NT $50.88 68,681 62.8 51.9 42.3 3.2 3.5 20% Eric ERICY $32.38 64,653 40.0 42.6 32.1 2.7 3.1 17% Motoro MOT $87.50 54,425 150.9 43.3 28.2 1.8 1.8 17% Tella TLAB $54.06 21,807 55.7 41.3 32.2 10.1 11.7 30% Alcate ALA $27.75 22,644 28.3 29.2 22.7 0.7 0.9 21%