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

To: telecomguy who wrote (14508)	4/24/2000 11:10:00 AM
From: Mr.Fun	Read Replies (2) \| Respond to of 21876

TG, My response: 1. McGinn did not know until at least half-way through the month of December that LU would miss. I had a meeting with Rich in early December and I am sure he did not know at that time. 2. Your characterization of LU customers defecting in droves is flat out wrong. NT's optical sales growth is not coming from traditional LU customers, rather from new build customers who had previously no relationship with any optical vendor. The OC192 sales that drove 80% YoY growth for NT came from the likes of Qwest, Level3, Williams, WorldCom, et. al. not from AT&T, the RBOCs, or PTTs. BTW NT has so much demand from its new carrier customer base, that it is quoting 5 month lead times for 10G gear. I don't think many LU customers will switch over just to wait 5 months. 3. As I wrote in my previous post, optical product transition cost about $300M in 1Q, when the magnitude of the miss was about $1.1B. Obviously, there was something else going on. 4. Also as I wrote, I believe the main reason for the 1Q revenue shortfall was misforecasting the impacts of changing seasonality and sales force incentives. This has been exaccerbated by the intermidable SAP implementation from hell. 5. Point #4 coupled with extreme back-end loading in 1Q also explains why LU didn't identify the shortfall until late in the quarter. When a sales force is compensated to complete deals by September, there is not much low hanging fruit to harvest in Oct and Nov. 6. No question LU is in the penalty box right now and bears are overscrutinizing every line item in income statement and balance sheet to justify a negative stance. However, if you can get enough information to counter the arguments, it means there is a ton of upside. Just because some vocal analysts don't like a stock, doesn't mean they won't upgrade it on the upswing. The sell siders i respect most like this stock and my own due diligence supports that position. 7. If you want to talk hyping a stock, start and end with your beloved NT. John Roth has been in our offices twice in the last four months pounding the table on the stock. They must be very afraid of what happens with the BCE float. If NT doesn't crush consensus numbers by at least a nickel, it will get hit bad.