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

To: KYA27 who wrote (11371)	11/25/1999 9:50:00 AM
From: Kent Rattey	Respond to of 21876

From the NT thread: Biggest single threat to Ottawa's 'Silicon Valley' is Lucent Billions at stake: But momentum has belonged to Nortel and JDS this year James Bagnall Financial Post MURRAY HILL, N.J. - No single firm offers as much potential danger to the Ottawa region's high-tech sector as Lucent Technologies Inc., the New Jersey-based technology giant. Lucent competes head-to-head against Nortel Networks Corp. on a wide range of products. Earlier this year it acquired, for $24-billion, a firm that makes the same kind of data networking gear as Newbridge Networks Corp. Lucent also operates a micro-electronics unit that poses a threat to suburban Kanata-based Mitel Corp. Finally, the New Jersey conglomerate maintains a more complex relationship with suburban Nepean-based JDS Uniphase Corp. On one hand, Lucent's micro-electronics unit makes fibre-optic gear that competes with JDS products. On the other, a separate Lucent business is JDS's biggest customer. Yet, although Lucent is coming off a banner fiscal 1999 -- in which sales jumped more than 20% to $38.4-billion (US) -- the investor momentum this year has belonged to Nortel and JDS. From year-end 1998 to Nov. 18, Lucent's share value jumped a modest 42% compared to a more than tripling of Nortel's share price and a sextupling at JDS. Along the way, Nortel's share price has climbed to a lofty 61 times projected earnings, which means it now commands a respectable premium over that of Lucent, which trades at 52 times earnings. The upshot: Investors now appear to believe that Nortel has stronger growth prospects. Lucent's amiable chief executive Richard McGinn believes it's a case of investors' perceptions catching up to, and maybe surpassing, reality. "A year ago people said that Nortel had higher value than was reflected in the stock. Now it has gone up dramatically. Good for Nortel," he said in a recent interview. This is not said with any apparent bitterness. Nortel and Lucent -- which used to be the equipment manufacturing arm of AT&T Co. until it was spun out three years ago in a public offering -- have been rivals for decades. Every few years one or the other seizes the lead in a hot technology and the other plays catch-up. This year, thanks to its blazing fibre-optics division, it is Nortel's turn. "Nortel's revenue growth has picked up," says James Kedersha, an analyst with SG Cowen. "It's because they have really hit a sweet spot with their fibre-optics technology." Nortel is expected to top $28-billion in revenue in 2000 -- up about 23%. This compares to projected sales of about $45-billion (US) for Lucent -- up about 18%. Mr. McGinn, who has been with AT&T and its spinoff for 30 years, readily acknowledges Nortel's wide lead in a branch of fibre-optics that uses a technical standard known as Sonet. But that's all he'll concede. Lucent competes in nine communications networking segments aimed at service providers and claims a lead in all but Sonet-based gear. But Mr. Kedersha thinks Lucent isn't playing the numbers straight, adding that Nortel probably also has a lead in the fast-growing optical networking niche focusing on dense-wavelength division multiplexing (D-WDM) technology. Late last week RHK Inc., a San Francisco-based consulting firm, appeared to confirm Mr. Kedersha's reading of the situation. RHK noted that Nortel had picked up a 41% share of the North American market for Sonet gear compared with 27% for Lucent. More important, RHK concluded that Nortel had also grabbed a leading 34% share of the market for D-WDM equipment versus 29% for Lucent. John Roth, CEO of Nortel, told analysts earlier this month in New York he expected his overall fibre-optic business to jump from $4-billion (US) this year to $10-billion (US) next year -- a figure that caused some astonishment at Lucent. "We can't see where he's getting that kind of growth," said Harry Boscoe, Lucent's senior vice-president and chief technical officer. "Our D-WDM is growing at triple digits and there's not that much business to go around."

To: KYA27 who wrote (11371)	11/26/1999 12:29:00 AM
From: jack bittner	Read Replies (1) \| Respond to of 21876

i have a large position in lu and i am puzzled that the stock, while it has given me an excellent return, has not garnered the market's interest as have stocks of much lower intrinsic value. no one competes at lu's level but nt; and not even they have such a mass of fundamental patents: over 2,000 patents in optics alone, 5,000 of the installed systems - 29% of the market; leader over nt in 7 of the 9 photonic product areas. but here i am preaching to the believers. could you tell me what you mean by "as soon as we get past this quarter", or words to that effect? what is it about this quarter, do you think, is holding lu from rising to the 100 you predict. and why 100 or so? that is, why not 85, or 150, or whatever. would 100 be some multiple of revenues or earnings,or some comparative calculation? or did you mean, in a manner of speaking, the next round number - a quantitative metaphor for "higher"?