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To: Kenneth E. Phillipps who wrote (35722)	5/18/2000 2:01:00 PM
From: SyncMan	Respond to of 77400

Mr. Fun, you must be optomistic about LUs chances of taking market share from NT in OC-192. I don't think you have to be optimistic to believe that. I think the numbers are showing the NT can't possibly make enough 192 to go around. So any vendor that can produce 192 that works will get market share. Lucent (and Cisco) and Fujitsu are all going to get there, it's a question of time.

To: Kenneth E. Phillipps who wrote (35722)	5/18/2000 2:06:00 PM
From: Mr.Fun	Respond to of 77400

Ken, 1. I believe NT will find it difficult to ramp production and deployment enough to grow its optical business to much larger than $10-11B this year. This limits the amount of 10G business NT can accept. In fact, contacts at NT suggest that it will have its hands full just meeting the needs of its existing customer base, much less reel in new customers. Do you remember what Mr. Roth said on the CC when asked whether he could get the AT&T business? He basically said he had a full order book right now. 2. This means a number of traditional carriers and brand new networks are up for grabs. LU, with an array of new 10G products, is well positioned to fill the gap. Say what you will about LU being late w/ 10G, they still are ahead of everybody but our Canadian friends. I hear that LU's 400G DWDM is faring very well in evaluations at Sprint and MCI. Of course, LU is also limited by its ability to ramp capacity, but I feel pretty good that it will be able to sell everything that it can make. 3. NT sells more than optical gear. In CY99, 24% of sales came from enterprise, 22% from CO switching, 19% from wireless, 19% from optical, 7% from carrier data and access, and 8% from other. The non-optical is not doing particularly well relative to the competition. 4. NT put up 40% sales growth in Q1, after adjusting for the consolidation of joint ventures, vs. a Q1 99 compare where growth was a paltry 6%. The compare is still pretty easy in Q2, and I would not be surprised to see acceleration, particularly on the bottom line. However, by 2H 00 the compares get tough. I do not believe NT can come close to 40% growth in the second half, particularly given weakness in enterprise, carrier data, central office switching. Furthermore, the reports of NT pricing its wireless offerings at extraordinary discounts continues. 5. LU was first to announce ethernet-optimized optical equipment. Check out the 10G data express product. I am sure that Cisco is looking to add this capability via its recent metro DWDM acquisition.