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

To: t2 who wrote (4400)	1/26/2000 7:18:00 AM
From: uel_Dave	Respond to of 14638

Nortel rides optic wave past Lucent ottawacitizen.com Nortel rides optic wave past Lucent Canada's technology giant takes aim at Cisco James Bagnall The Ottawa Citizen Bloomberg News, The Ottawa Citizen / (The Left: Revenue and to the right: Earnings.) Nortel Networks Corp.'s laser-sharp optical networks group helped to power the company to a record fourth quarter that topped analysts' consensus estimates by a substantial margin. Nortel also announced yesterday a stock split, its third in the past two years. The two-for-one split is scheduled to take effect following its annual shareholders' meeting this April in Ottawa. The Brampton-based maker of networking gear reported net earnings from operations of $755 million, up 58 per cent from the same period in 1998. Earnings per share surged 53 per cent to 55 cents a share, compared with a consensus projection of 45 cents a share. Sales jumped 21 per cent year-over-year to $7 billion. Nortel reports in U.S. dollars. "We're firing on all cylinders," said Nortel chief executive John Roth, who has spearheaded most of his company's dramatic rise in fortunes after a major restructuring in 1993. Nortel's most-recent financial results offer a dramatic contrast with those of its traditional rival, Lucent Technologies Inc. of Murray Hill, New Jersey, which last week reported only a marginal rise in sales for its December quarter. Lucent put most of the blame for these poor numbers on its inability to keep up with demand for its optical networking gear, which increasingly is being used to build the Internet. Mr. Roth noted yesterday during a conference call that Lucent might find it difficult to catch Nortel in this increasingly vital sector. The Nortel chief said his company was the first to develop a fibre-optic system that runs at 10 billion-bits-per-second (10 gigabits), and it did so when Lucent was concentrating on a 2.5-gigabit system. Although Lucent has recently begun to ship a 10-gigabit system of its own, Nortel now has four years' experience with the faster technology. As a result, said Mr. Roth, his firm has been better able to cope with surging demand from phone companies and Internet service providers. "We're the only ones who can ship that system reliably," he said, adding that he expected the new Kanata fibre-optics plant -- which help expand Nortel's capacity -- to be up and running before the end of the second quarter. Mr. Roth suggested yesterday during an interview that Nortel should now be compared more directly with Cisco Systems Inc. of San Jose, California, which builds Internet gear called routers and has recently entered the fibre-optic wars as well. "A lot of people are now asking whether Nortel or Cisco is the leading Internet contender," said Mr. Roth. Although Cisco is the dominant supplier of networks for corporations, it is positioning itself to sell gear to service providers, the traditional haunt of Nortel and Lucent. Overall, Cisco's sales growth is more than double that of its two rivals, but it's also coming off a smaller base. A look at the firms' absolute revenues offers an interesting snapshot. Combined, Nortel, Cisco and Lucent recorded a $2.7 billion year-over-year jump in business during their most recent quarter. Cisco accounted for 48 per cent of the increase, while Nortel made up 46 per cent. This comparison may be unfair to Lucent, which has predicted it will eliminate most, if not all, of its performance bottleneck in the next few months. However, investors apparently still need to be convinced. Shares at Nortel and Cisco are trading at more than 100 times projected earnings -- or more than double the comparable ratio at Lucent. This suggests that investors are more impressed by the growth prospects offered by Nortel and Cisco. And not surprisingly, all but one of Nortel's business units are performing well. Fourth-quarter sales of Nortel gear to corporations were down marginally but sales to phone companies and Internet service providers more than made up the difference. Nortel's fibre-optics group reported an 80-per-cent leap in sales year-over-year while sales of access products, such as cable modems, were up more than 100 per cent. Revenues from wireless products were also up a healthy 33 per cent. For the year, Nortel posted net operating earnings of $1.7 billion, up 62 per cent from 1998. Earnings per share in 1999 were $1.28, up 38 per cent from the year before. Sales topped $22.2 billion, up 26 per cent from 1998. These numbers compared favourably with the "guidance" Nortel offered to analysts last April. At the time, Nortel expected to achieve sales of $21.5 billion to $22 billion, with growth in earnings per share slated to top 20 per cent. Nortel's chief financial officer, Frank Dunn, said analysts should look for sales in 2000 to rise 20 to 21 per cent (about six per cent faster than the estimated growth in the market), with earnings to increase even faster. "I'm very, very comfortable with this guidance," said Mr. Dunn. Nortel shares closed at $146.75 on the Toronto Stock Exchange, up $1.85 on the day and finished at $105, up $5 on the day, on the New York Stock Exchange. Nortel released its results after the markets closed. Nortel's share price jumped as high $108 7é8 U.S. in after-hours trading on other exchanges.

To: t2 who wrote (4400)	1/26/2000 7:31:00 AM
From: Stocker	Read Replies (1) \| Respond to of 14638

The 900-pound gorilla most feared by the others Lucent Technologies David Olive Financial Post For all its recent woes, Lucent Technologies Inc. is still the 900-pound gorilla most feared by the other convergence players bidding to merge Internet with traditional telecommunications technology. The former AT&T Corp. subsidiary enjoys a size advantage over Nortel Networks Corp. and its other fellow telecom suppliers, and towers over hot start-ups like Cisco Systems Inc. Unlike both those firms, Lucent has largely eschewed takeovers in favour of nurturing internal technological breakthroughs. And judging by the success of its LambdaRouter, a recent triumph of its captive R&D engine, Bell Labs, Lucent has a shot at keeping pace with state-of-the-art products that Nortel and Cisco are pulling into their portfolios by way of pricey acquisitions. That said, Richard McGinn, the CEO, has shown signs of running scared, as when, it can be argued, he overpaid last year in lashing out $20-billion (US) for Ascend Communications Inc., a direct rival of Nortel's recently acquired Bay Networks Corp. in the field of Internet routers. "We intend to lead the networking revolution," said Mr. McGinn, smarting from accusations that the Ascend deal was a nervous response to Nortel's purchase of Bay a few months earlier. "With Ascend, we will become the clear leader." And less troubling than the profit shortfall reported this month that prompted Wall Street to dump Lucent stock is the reason for the earnings hit. Mr. McGinn cheerfully concedes Lucent is suffering from too much of a good thing. It simply stumbled, he explains, in trying to cope with a huge, unanticipated demand from customers eager to switch to Lucent's newest fibre-optics products. Fair enough. But Boeing Co. said as much a few years ago in accounting for a similar debacle, and predicted a swift return to prosperity. No such luck. The production delays continued. And in a booming market for air travel, impatient customers flocked to Airbus Industrie for a new generation of more efficient aircraft. Having made the switch, the airlines that defected from Boeing are unlikely to go through the disruptive process of shifting their business back to the Seattle giant. Telecoms, operators of corporate networks and other buyers of New Age telecommunications products are similarly desperate. They don't want to fall behind competitors who are better wired than they are. Their hunger for the latest software, equipment and complete "turnkey" network systems has already driven many prospective Lucent clients into the arms of competitors. That is precisely the outcome Mr. McGinn sought to avoid on becoming CEO in 1998. Like John Chambers, Cisco's CEO, he quickly identified Nortel as a major threat, and used that message to get his managers and techies -- who were engaged in internal rivalries -- to focus instead on beating the Northern marauder. At a retreat for 60 top executives in Tucson in 1998, Lucent put up "Wanted" posters of Mr. Roth, Mr. Chambers and the CEOs of other chief competitors. Mr. Chambers was not amused by that stunt. "McGinn made it personal," he said. "It sent a bad message to his employees." As for Mr. Roth, the Cisco chief has consistently praised his Nortel rival as a superb manager even as the two men exchange good-natured ripostes about each other's prospects. As Nortel closes the market-cap gap between itself and Cisco (Nortel is worth some $200-billion US, and Cisco about $360-billion), a megamerger between the two is not inconceivable. LUCENT TECHNOLOGIES: - CEO: Richard McGinn - Headquarters: Murray Hill, N.J. - Employees: 153,000 - Market Capitalization: (US) $169-billion - Designs and builds a wide range of network and communications software, telephone systems and other components, as well as fibre-optic projects. NORTEL NETWORKS: - CEO: John Roth - Headquarters: Brampton, Ont. - Employees: 70,000 - Market Capitalization: (US) $136-billion - Provides telephone, data, wire products for the Internet and serves carrier, service provider and enterprise customers. CISCO SYSTEMS: - CEO: John Chambers - Headquarters: San Jose, Calif. - Employees: 23,500 - Market Capitalization: (US) $369-billion - Supplies data network products. Clients include governments and corporations.