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To: bambs who wrote (40625)	10/11/2000 7:10:21 PM
From: Ed Forrest	Read Replies (2) \| Respond to of 77397

You aren't worth responding to All I can say it that I'm crestfallen that after my approach to you in,what I considered, a very civil manner you respond so curtly. I gather from your response that you felt my queries intrusive.If you wish,I'll rephrase.

To: bambs who wrote (40625)	10/12/2000 11:09:28 AM
From: The Phoenix	Respond to of 77397

As I had mentioned - LU problems are LU problems... Now even McGinn admits it. redherring.com Personal Capital: Lucent is a loser By R. Scott Raynovich Redherring.com, October 12, 2000 To get this column sent to your inbox, subscribe to the email newsletter. Last time Personal Capital visited Lucent Technologies (NYSE: LU), in June, I called it one of the "unloved." Now it's downright hated. The past few months for Lucent should go down in history as one of the most cataclysmic breakdowns in global business management. The company reported its third earnings warning of the year on Tuesday night, and the stock fell more than 30 percent on Wednesday as a result. Lucent, once considered a bellwether technology growth stock, is off its rocker, and management's ridiculous assessment of the situation leads you to wonder what they've been doing for the past year. It's hard to see chairman and CEO Rich McGinn finishing the year in his current post. Deborah Hopkins, Lucent's new chief financial officer, actually told the audience during the company's Tuesday night conference call that she thought Lucent was "sitting on a pile of gold." Lucent investors must be wondering where she's stashed the ore. They have seen their pile of gold gathered up as dust and blown into the wind. At the beginning of the year, Lucent was trading at $72, and now it's flirting with the teens. Investors holding the stock at the beginning of the year have lost more than 70 percent of their money. WHAT WENT WRONG? What happened? First of all, Lucent missed the grandest opportunity in a business in which it was supposed to be a leader: optical networking. Whereas companies such as Cisco Systems (Nasdaq: CSCO) and Nortel Networks (NYSE: NT) have fueled their corporate growth by successfully introducing new optical product lines and making strategic acquisitions, Lucent simply missed the boat. In its latest earnings warning (Lucent might as well start scheduling conference calls for its warnings, as well as earnings announcements, because they appear with such regularity), the company said its optical systems revenue would be down 5 percent in the quarter from the year-ago period. Yes, that's right -- the company announced negative growth in one of the fastest growing segments of the technology market. The good news: the sympathy hit in related networking stocks was unwarranted, since this grim situation couldn't be more company-specific. Lucent is losing, and others are winning. Hence, optical networking's importance as a cog of growth in the networking sector has swelled, rather than abated. The second part of the good news: the Lucent debacle reaffirms startup culture and underscores the importance of moving quickly and decisively in emerging technology markets. If you're not a startup, you must find ways to integrate them. Innovate or die. The bad news, for Lucent shareholders: it's become evident from the deterioration of the financial situation that the current management team lacks the skills to turn this company around -- and Wall Street has certainly voted on the matter. Mr. McGinn stated earlier in the year that he was spinning off Avaya Communication (NYSE: AV) (and now the components business as well) to leave Lucent with the highest-growth business. Well, now that he's whittled the company down, his share of the highest-growth business, optical networking, is actually declining. Call it the spin-down strategy, rather than a spin-off strategy. OFF WITH MCGINN'S HEAD On top of these strategic disasters, the current management team has done a miserable job of accurately assessing and informing the public of its problems and managing its relationship with Wall Street investors. The scorn for Mr. McGinn has reached epic proportions on Wall Street. One fund manager, asking not to be named, calls him a "pathological liar." Even Wall Street analysts, traditionally polite in their research reports, are starting to question the explanations given by Lucent's management team. "Over the last few quarters, Lucent management has suggested that many factors such as production constraints, lack of qualified installation employees, and aggressive pricing by competitors limited optical system sales and profitability," wrote Steven Levy, an analyst with Lehman Brothers, in a research report on Wednesday. "The company's management is now saying that the gating factor is customer acceptance." At this point, Lucent investors still holding the stock might be so far down on their luck that they might consider holding onto their shares hoping for the best in the long term. The company is obviously heading for a major restructuring, and possibly a revamped management team. But can it get any worse? Based on management's recent track record, you have to assume yes -- it will get worse before it gets better.