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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: zbyslaw owczarczyk who wrote (2446)	9/23/2000 9:33:04 PM
From: Ian@SI	Respond to of 3891

Favourable mention of ALA in the new Barron's. Subscribers may read the whole article at: interactive.wsj.com ... Q: Let's move to technology stocks. Mark, what is your view in general on European technology, and have you some favorites? Pignatelli: Two areas that excite us are transmission on the fixed line and mobile infrastructure. Alcatel, for one, has as good an array of products across the board as any company. It owns half the ADSL market, 25% of the WDM market, where Nortel dominates, and about the same amount in switching and routing, which is Cisco's pond. The company is going to divest other bits and pieces to create a pure-play telco-hardware manufacturer. It is undervalued relative to the other companies out there. On 2001 earnings before interest and taxes, it trades at roughly 25-28 times, versus to 55 times at Nortel or 100 for Cisco. Shares could rise anywhere from 50% and 100% from here if TMT valuation stays intact over the next 18 months. ... Manookian: I concur on Alcatel. Trading at 40ish times next year's numbers with 35% three- to five-year earnings growth seems absurd, given the kind of valuations we see on some of these U.S. companies and even relative to some other telecom-equipment companies in Europe. We have a target of 30%-40% from here for the near term. Q: What's been the knock on Alcatel? Manookian: It has always been at a discount because it has a mishmash of businesses, industrial businesses and cable businesses, things that people have never been particularly keen on. It wasn't a particularly well-run conglomerate in the past. Serge Tchuruk came in about three years ago and began weeding out the low-return business to focus more on telecoms. If they execute on numbers each quarter going forward, that relative multiple gap will get smaller. Nokia is also better positioned in the infrastructure than the market seems to believe. They've got probably a 35%-40% market share in global packet radio service contracts already. [GPRS is a 3G -precusor system slated to be running in parts of Europe next year.] Many of those awards represent contracts they took away from other vendors who weren't able to deliver. This is likely to happen in the more lucrative 3G as well, where some other companies have the early lead in share. ...