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

To: Curtis E. Bemis who wrote (12301)	1/7/2000 8:31:00 AM
From: GVTucker	Read Replies (2) \| Respond to of 21876

1. First and foremost to me, Lucent still possesses one of the great assets in the technology world, Bell Labs. This asset and its current under-utilization is probably the primary reason that I didn't short LU. 2. McGinn is not a Bell Labs guy, he is a utility guy. He comes from the regulated world of the old AT&T. As I have said many times here, he is certainly a bright guy, but I don't think he has the perspective necessary for the world that Lucent operates in. 3. THIS IS A BIG KEY TO ME. Lucent also warned for the 2Q. If the most optimistic guidance is used, LU will earn 23½ is 2Q. Combined with the most optimistic number for 1Q (39½), that puts the first half of the year at 62½. For the total year, McGinn set expectations at 20%-25% above $1.20, or $1.44-$1.50. Prior to this warning the average analyst estimate for the 2nd half of the year was 72½. If earnings reach the best possible number for the first half, to reach even the lowest of Lucent's guidance, LU would need to have 82½ in earnings in the second AT THE LEAST, which is 14% above the prewarning number. This tells me that management still hasn't faced reality and come to grips with a probable loss of market share. I think that LU is setting us up for another warning in one of the next two quarters, if not both. 4. Although I was criticized by making this point 3 months ago, note that most of the shortfall was in the service provider business. LU needs to diversify its customer base. Keep an eye out for any trend here. 5. I'm not buying. And if the price gets back into the 70's within the next quarter (certainly possible, if the market recovers) I could easily be shorting.