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

To: GVTucker who wrote (11967)	12/30/1999 8:29:00 PM
From: Mr.Fun	Read Replies (1) \| Respond to of 21876

More on the 10K. 1. Still waiting on answers on the QSPE. I am certain that I will get them right after new years, and I will advise. 2. The original Saudi contract was for $7.3B over 5 years. Of this, $1.63B remains in backlog, $700M is the A/R being used as collateral on the QSPE and $625M is the QSPE itself. About $4B has been billed and paid. Of note, there is a second $7B procurement underway, likely to be split amongst several vendors, one almost certain to be LU, althought here is no telling what %. 3. The market for telecom debt remains extremely strong and there has been only one instance of default that I can think of - Iridium. A commitment of $7.1B relative to $38B in sales is close to NT's commitment of $4.7B relative to $26B in sales. I don't have the #'s at home, but last time I checked ERICY had financing commitments of over 25% of their annual sales. 4. The $1.6B in on-books financing is considered a note receivable and included in Other Current Assets (not A/R). NT includes its $995M in on-books financing as Long Term Receivables (not trade receivables). 5. The reduction in allowance for doubtful accounts largely occured in 1Q99. I was told by the controllers office (cough, cough) that about $200M of the reduction was the result of the receipt of payment for a long-held receivable from Malaysia. Current levels of allowances are still considerably above industry comparables suggesting ample conservatism in this measure. Perhaps LU is guilty of saving earnings in an earlier period by artificially conservative allowances which were conveniently reduced to more appropriate levels during the "difficult" 1Q99. I believe that the current levels could come down further in the future and still leave plenty of allowance for conservatism. 6. All of the 10K criticisms I have heard are exactly the same criticisms I heard in February last year. At the time they were hauled out as evidence that the company was cooking the books to artificially make sales and earnings targets and that it portended a deceleration in sales and earnings growth. In actuality, sales growth accelerated to over 20% YoY and LU beat EPS estimates by an average of 3 cents a quarter. Forgive me if I remain optimistic that the terrific order activity I hear about will turn into continued strong sales and earnings growth.