Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bill who wrote (16801)	10/16/2000 2:50:25 PM
From: Paul Reuben	Read Replies (2) \| Respond to of 21876

McGinn Keeps Shaking Up Lucent's Top Ranks thestreet.com

To: Bill who wrote (16801)	10/17/2000 11:46:23 AM
From: Techplayer	Read Replies (5) \| Respond to of 21876

e-Bill, here is a good one... Chromatis CEO regrets selling to Lucent for $4.5 bln in shares -- By Gabrielle Jonas, BridgeNews New York--Sept. 27--Chromatis Networks would never have let itself be bought by Lucent Technologies Inc. had it known that shares of Lucent were going to fall so precipitously, the head of the Israeli optics start-up told BridgeNews. But at the same time, the executive added, the press is too hard on Lucent and too easy on competitors Nortel Networks Corp. and Cisco Systems Inc. * * * He also said that Chromatis has yet to ship product and will work out tax issues between the United States and Israel. The executive added that any replacement of troubled CEO Rich McGinn should come from outside the company. Lucent said June 1 it would purchase Chromatis for $4.5 billion in Lucent shares. At the time, Lucent shares were worth $60 each. Four months later, the shares have lost more than half their value, closing at 28 3/4 Wednesday. The CEO of Chromatis, Bob Barron, whom Lucent Technologies made president of its new metropolitan optical networking group, expressed regret while speaking in a one-on-one interview with BridgeNews at the Jerusalem Venture Partners annual meeting in New York Tuesday. "We had a lot of interest from other potential buyers of Chromatis," Barron said. "And we were far along in negotiations with some of them." Added Barron, "Lucent was not the highest price. Several people wanted to negotiate with us. The advice we got from our advisers that the reason we should go with Lucent is their 'strong currency.' We had no idea that it was a state of affairs that we all know in the industry they are in today. No one knew they had problems like that. Obviously, had we known what we know today, we would have gone with somebody else from a sheer monetary perspective." At the same time, the executive defended Lucent. "Criticisms have gone way overboard," he said, referring to its low stock price as well as how the company is managed. "The amount of criticism is not fair. If people knew what I know is going on with Nortel's, Alcatel's, and Siemen's turnover rates, they'd know there's no difference between Nortel and Lucent." Nortel suffers from the same personnel issues Lucent is accused of having, Barron said. "Why else would Nortel fly over Lucent with banners asking employees to go to work for Nortel?" Barron said. Critics of Lucent's exorbitant vendor financing program are not being fair to Lucent, he said. "Vendor financing is alive and well," Barron said. "All of the providers still ask for it. Most times they in fact require vendor financing packages." When asked whether he would consider running Lucent, Barron said, if a search was ever necessary, "they should go outside of Lucent and get somebody who's run a large corporation before who has a very polished name on Wall Street." Barron wouldn't be specific about business objectives for Lucent's metro business, except to say that the products will go into live networks in the last quarter of this calendar year. Chromatis and competitors have yet to deploy any metro product, although Chromatis products went into field trials last January. But a good rule of thumb in how much time to give a start-up until the time it ships product is three to six months from the time it is acquired. By that rule, Chromatis should really be shipping by November. "Metro is up for grabs," Barron said. "Metro business overall will be five to 10 times what the market for the core has been. It's just about to explode that next calendar year. We have captured mindshare for that space. "Lucent is making the most market share in the metro space." Barron spent some time late Tuesday reassuring jittery private investors about how that tax status would fall out. Chromatis investors are waiting to see whether the Israeli tax rate or the United States tax rate will prevail. In Israel, new companies pay virtually no taxes, reaping the benefit of generous R&D credits. But even companies of long standing, such as ECI Telecom, pay only between 5% and 6% in corporate taxes there. Although Israeli start-ups hold a lot of appeal for their innovation and Israeli army-trained staff, investors prefer companies whose earnings are fully taxed. "Analysts want to do a comparable valuation," an analyst who did not want to be identified said. "Once you do that, the Israeli companies don't look so cheap anymore." Personally, I believe that the guy is bummed that he sold to LU and that the rest is sales fluff. There has not been a chromatis sighting in the metro space from what I have seen, so how could they have mindshare? tp