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

To: The Phoenix who wrote (10649)	10/25/1999 2:21:00 PM
From: TTOSBT	Respond to of 21876

Re: "One serious bug and a significant amount of revenue goes unrealized. Very dangerous." Than wouldn't it be prudent to surmise that if LU were reporting in this manner all along, it is that much more undervalued when compared to CSCO's PE? Likewise wouldn't it be more prudent that any forward guidance by LU be given much greater weight than what CSCO would have in the way of forward guidance? In other words am I correct in assuming that LU's guidance is likened to CSCO's actual reporting and CSCO's guidance is more projection? I feel tomorrow's release is not so much the figures but the forward guidance by LU. TTOSBT

To: The Phoenix who wrote (10649)	10/25/1999 2:23:00 PM
From: Mr.Fun	Read Replies (1) \| Respond to of 21876

In a contract for a 5ESS, WaveStar400G, CDMA-One Wireless Installation, or Definity PBX, there is a clear definition of customer acceptance. Orders are scheduled - delivery, installation and acceptance testing - in advance. It is in both customer and vendor best interest for the equipment to fairly pass acceptance. In this way, revenue recognition is not dictated by the customer, but agreed to by a mutual process. Certainly, if LU fails to live up to customer expectations acceptance can take much longer than planned. But in those circumstances, I would rather a company consider the system finished goods inventory rather than a collectible - call me conservative. In the end, the vast majority of LU contracts are accepted on schedule. I'm not so certain that there is any problem on the data side. On the data side, carriers have much lower expectations for acceptance. Furthermore, since LU's carrier data business came from acquisitions, notably Ascend, which did not follow LU's traditional practices for revenue recognition, LU is using a bill on ship model for that part of its business. Moreover, it is a benefit that LU is in so many different parts of the business. Carrier spending is very lumpy, so the more different products you sell to a wider array of customers, the smoother should be your revenues and earnings.