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

To: Curtis E. Bemis who wrote (12255)	1/6/2000 10:51:00 PM
From: Matt Meagh	Read Replies (1) \| Respond to of 21876

my overdramatized point was ... why be a churl?

To: Curtis E. Bemis who wrote (12255)	1/7/2000 7:32:00 AM
From: Zoltan!	Respond to of 21876

Greenberg says Levy was right, wrong to throw in the towel: Extra Why It Was Only a Matter of Time for Lucent By Herb Greenberg Senior Columnist 1/6/00 9:16 PM ET .... Back in October, on "TheStreet.com" on Fox -- eight months after this column first noted concerns about Lucent's fundamentals -- I said (as part of our predictions) that I thought accounting issues would "catch up with the company, and come their earnings, the stock could suffer." Then, a few weeks later, the company reported a better-than-expected quarter -- so good, in fact, that it scared many a bear out of the stock. (Lehman Brothers analyst Steven Levy, one of the few contrarians, was among those to throw in the towel; he even raised his target early today before the bad news was announced.) Among the reasons for the newfound respect: The balance sheet looked better. Or so it seemed -- in retrospect, proving itself one of the great financial fake-outs of recent time. One notable improvement touted by the company was a drop in receivables days outstanding. However, a closer look showed the company had actually sold a chunk of receivables -- making its balance sheet look better than it really was. (No, I never wrote about that because the company, I'm sorry to say, talked me out of it by arguing that with the sale of the receivables went the liability associated with them. Note to self: Next time write the story with the response.) As it turns out, if you factored in the sold-off receivables, days outstanding actually rose by more than 10%! "This company has been stretching the truth for more than a year now, but they were stretching the truth and they ran out of tricks," says Robert Olstein of the Olstein Financial Alert fund, one of Lucent's most vocal critics. The company offered a host of explanations. But at the core of the issue, my sources say, is that the company's profitable circuit-switching biz -- those big old central-office switching devices -- is slowing. And one plugged-in source says that, in the U.S., Lucent's next-generation networking equipment is losing market share to Nortel Networks (NT:NYSE - news). What's more, as the negative analysts have been saying all along, Lucent's earnings growth was really never all it was cracked up to be. Much of it came from cutting bloated operating expenses inherited from AT&T (T:NYSE - news). Reality? Balance-sheet tricks only work for so long -- and not nearly as long in turbulent markets as in bull markets. Of course, whenever I questioned Lucent, my Hostile React-o-Meter went spinning out of control. Sort of the way it is these days with the Lernahooligans. P.S.: Kudos to analyst Eric Buck of Donaldson Lufkin & Jenrette. When I first wrote about Lucent last February, the column started with the line, "From the 'fundamentals eventually do count' department: Often when a company blows up, you can look back and see one or two analysts who had veered from the pack by downgrading the stock but who, at the time, were considered irrelevant." Buck was one; Levy was the other. Buck, who never recommended purchase of Lucent, stuck with his conviction. And while the stock is higher than it was when he initiated coverage (initially with a sell), any Lucent investor reading his reports wouldn't have been blindsided. "It's a great company," he told me yesterday. "They just over-promised on what they can deliver in terms of their long-term growth rate." thestreet.com:80/comment/herbonthestreet/856192.html