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

To: Techplayer who wrote (13538)	2/14/2000 5:39:00 PM
From: telecomguy	Read Replies (1) \| Respond to of 21876

No time i am afraid..........

To: Techplayer who wrote (13538)	2/14/2000 5:48:00 PM
From: Maverick	Respond to of 21876

CSFB has a strong BUY on LU following Ortel acq. Lucent announced a definitive agreement to acquire Ortel Corporation in a stock transaction valued at approximately $2.95 billion. The terms of the transaction call for each share of Ortel to convert into 3.135 shares of Lucent. At $177.13 per Ortel share, Lucent paid 31.1x firm value to fiscal 2001 (April) consensus revenue of $94 million, which is within the public and private market multiples for fiber optic component manufacturers. The deal will be accounted for as a purchase transaction and is expected to close in the June quarter of 2000. Ortel is a manufacturer of opto-electronic components targeted for cable TV and telecommunications applications. For the quarter ending October 1999, Ortel reported revenue of $19.4 million, up 10% sequentially. The primary top -line drivers were photo diodes, 1310nm transmitters, and analog DWDM 1550nm laser transmitters. Other key products include 10Gbps transmitters/receivers and un-cooled 980nm pump lasers for metro applications. (Please note that in December 1999, Lucent awarded Ortel a multi-million supply agreement for un- cooled 980nm pump chips for use in metro networks.) Ortel's OEM customers are Antec and Motorola/General Instrument. We view the acquisition as a modest positive for Lucent as it expands its footprint in the fast growing cable sector. Further, we expect manufacturing synergies to result from Ortel transitioning to Lucent's well recognized highly automated manufacturing process, though specifics regarding timing and products were not provided at this time. While the acquisition enhances Lucent's position, given that the CATV market currently represents only a small subset of the broad optical networking market, we do not believe that the acquisition dramatically alters the fiber optic component competitive landscape (i.e., no impact on JDS Uniphase, SDL, and E-TEK Dynamics). Lastly, Lucent's management will be breaking out intangible and goodwill amortization charges on a going forward basis so that comparisons can be made to the company's closest peers. This reporting format is consistent with that of comparable companies', such as Nortel Networks and Cisco Systems, income statements. In fiscal 1999, Lucent's cash EPS (earnings per share excluding the per share impact of amortization of goodwill and other acquired intangible assets) were approximately $1.28, an increase of $0.08 over the reported EPS of $1.20. In fiscal 2000, we forecast cash EPS of $1.33, as compared to our current $1.25. In regards to the Ortel acquisition, LU's management indicated that excluding in-process R&D charges and on a cash earnings basis, the transaction is expected to be effectively neutral to both fiscal 2000 and fiscal 2001 EPS (dilutive to fiscal 2000 EPS by $0.01). Including amortization of goodwill and other acquired intangible assets, the acquisition is expected to be dilutive to fiscal 2000 EPS by $0.08 ($0.04 in FH2:00) following the deal closure. We will be revising our model to reflect cash EPS upon the closing of the Ortel acquisition. Lucent Technologies (LU, $56.62, Strong Buy)