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To: Rainmaker who wrote (1130)	10/11/2000 6:21:28 PM
From: Tom Hughes	Read Replies (1) \| Respond to of 1944

LU stated that carrier spending is not the problem As I read McGinn's statement, LU has a quality problem that led to its competitors taking business. thestreet.com McGinn said that optical-manufacturing capacity was not an issue but that the certification process was a snag. In other words, the quantity of the production is fine -- it's the question of quality that still needs to be fully resolved. Surprisingly, Lucent even lost momentum in its strong suit: sales of conventional phone equipment. The company says the weakness cut both total sales and gross margins. McGinn was asked whether he was seeing a decline in demand for products, to which he replied that that was not the case. "You should not equate this to a decline in carrier spending," said McGinn. "The market overall for the building blocks of the broadband and mobile Internet remains strong." But clearly the turmoil that has swept under some of the new phone and data network-service providers -- such as GST Telecommunications, which filed for bankruptcy protection in May, and financially troubled ICG (ICGX:Nasdaq - news) -- hurt Lucent's sales to emerging carriers. Lucent says it had to transfer extra cash to cover bad debt among some of its less stable customers. TH