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

To: Techplayer who wrote (11921)	12/26/1999 6:44:00 PM
From: hitesh puri	Read Replies (1) \| Respond to of 21876

After reading a few recent analyst reports one can surely see there is an agenda against Lucent on Wall Street. I will list the key points in from some of those reports that I read in the last 2 days which help highlight this undeserved maligning : M. Ching of Merrill Lynch : The $7.1 Billion vendor financing (reported in the latest 10K that caused a lot of fuss) represents about 19% of Lucents total revenue in FY99. This is pretty much in line with the competition since NT has entered into agreements to provide upto $3.7 Billion of vendor financing as of Sept. 99. That represent about 18% of Nortels total revenues for the trailing four quarters. This has been a sore point with me regarding treatment of Lucent on Wall Street. Why look at absolute numbers (inventories, cash flow, financing etc.) as compared to the competition? Look at it in terms of percentage of revenues. Why should Lucent suffer because they have revenues the size of 4 Ciscos combined ? Paul Sagawa of Sanford Bernstein : a) Lucents seasonality should be well established by now. December has beenthe slowest YoY growth quarter since company existed. Critics who would like to add back the $800M revenue that did not get recognized in 1Q99, should also subtract that revenue out from the March quarter. Furthermore, by that same logic, if the $500M in revenues awaiting customer acceptance slips into 2Q then those critics should credit it anyway for sake of consistency. We believe the only fair way of compare this year vs last year is to combine 1Q and 2Q. We are projecting sales growth of 18% in 1H00 with further acceleration in 2H00. b) Next 2 quarters are likely to be better than market expectations. GIven that NT is trading at a shocking 66% premium to LU, we believe that there is considerable room for multiple expansion on top of our expected 32% EPS growth for FY00. c) Our research shows great strength in most Lucents important units and we believe that the carrier market is accelerating ahead of the 15% growth and that Lucent is poised to deliver more than its 17-20% growth. Reports from the field show that 50% of Lucents revenue contributors are growing at 25% or more. Optical is growing at triple digit rates! At 47 times expected CY00 earnings LU remains an extraordinary bargain relative to its peers NT (79 times CY00 EPS) and CSCO (92 times CY00 EPS !!!). As a result we have set a 6 month target of $100 and believe that there is considerable upside to this seemingly aggressive target. -Hitesh