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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Bill who wrote (4359)	1/25/2000 6:13:00 PM
From: Kenneth E. Phillipps	Read Replies (2) \| Respond to of 14638

Nortel CEO outlines 'second wave of e-business' zdnet.com

To: Bill who wrote (4359)	1/25/2000 6:40:00 PM
From: Paul Fine	Read Replies (1) \| Respond to of 14638

NT Conf Call Summary(also on RB and Yahoo): First of all, I was also unable to access the call via the Webcast; had to go the old-fashioned way on the phone. That aside, I thought the conf call went well. A subjective observation: Out of 13 analysts who got to ask questions, I counted only one who said "congratulations" to NT mgmt. All the others were "all business" and asked their questions. Maybe they feel alittle dumb not predicting better results? Detailed Summary: 1. 4th qtr saw a big comeback in Asia and CALA. This was reflected in strong growth in Wireless. China doing great. There was also strong growth in Wireless in the U.S. 2. Gross margins were flat at 43%+, with improvements in Carrier, but declines in Enterprise. 3. As I expected, there was focus on the poor performance in Enterprise(revs down 5% in 4th qtr vs YA). Roth said results were below objectives and mgmt changes were planned to address this. Also, the sales direction would be changed to have the direct sales force have more face-to-face contact instead of just being support people for the independent distributors. The Yr 2000 rev models assume Enterprise will return to double-digit growth, but not until 2nd half. Four of 13 analysts had questions on Enterprise even after Roth gave this summary. 4. Book to Bill ratio was a healthy 1.3:1.0 in 4th qtr. An analyst's question brought clarification that this was across many product lines, not just Optical carryover. That is a good thing, IMO. 5. The plant expansions announced in 4th qtr for Optical will come on line late this qtr/early next qtr. There is some expansion capacity built into those plants to account for continued growth in Optical. NT will continue to buy what it cannot make(like from JDSU). 6. CFO and CEO both said they are "very, very comfortable" with previous Yr 2000 rev guidance of about +21%. The "very, very" makes me think there is likely upside to that estimate as we move through the year. 7. Other analyst's question confirmed that Roth is still comfortable with his prediction of $10Billion in Optical sales this year. 8. Overall Wireless growth could be better than the "high teens" in current rev model due to turnaround in CALA(assuming Ecuador issue doesn't snowball throughout region) and buildout occurring in US with AT&T(took West Coast from Ericcson) and Airtouch business. 9. Still expect to close Clarify deal this qtr. but some delays occurred because the SEC hasn't done a full analysis of NT in five years. No problems foreseen, though. 10. "Succession" is still in trials and significant revs aren't expected until second half of this year. 11. In Enterprise, Versalar business is good. The open router code step taken in Fall is good(over 200 companies are using, incl. Microsoft), but my sense was it isn't bringing in big business(witness the 5% rev decline). Overall, I heard no major negatives, so long as the analysts don't focus on Enterprise. I expect to see Yr 2000 estimates to go up, with perhaps some upgrades. The aftermarket trading certainly leads us to believe tomorrow will be a good day for NT. As well it should. Other perspectives eagerly awaited- Paul