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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Ibexx who wrote (9115)	12/26/2000 8:28:26 AM
From: John Carragher	Read Replies (1) \| Respond to of 14638

from smartmoney.com But not all the news in the telecom sector was gloomy on Thursday. Nortel Networks (NT), increasingly Lucent's alter-ego, said it landed a contract with Deutsche Telekom (DT) subsidiary T-Mobile International to build third-generation (3G) wireless Internet networks across Europe. The deal could be worth between $320 million and $1 billion. Deutsche Telekom had previously relied on a fellow German company, Siemens, for wireless work. The deal marks Nortel's fourth big score in Europe, which is ahead of the U.S. in wireless build-out. Nortel, based in Canada, also recently announced an agreement with AT&T Wireless (AWE) in the U.S. — a blow to Lucent, which was the AT&T unit's former supplier. Nortel is gaining momentum in the promising 3G wireless market, says its vice president of wireless Internet, Peter MacKinnon. While the company doesn't reveal its revenue composition by product category, it did say that wireless sales grew more than 50% year-over-year in the third quarter. Meanwhile, optical remains Nortel's biggest growth category, with 90% growth over the same period. ING's Lauria figures Nortel's wireless revenue will total about $5.2 billion in fiscal 2000, 17% of total revenues for the year. The Y2K Divide Earnings per Share Jan.-March April-June July-Sept. Oct.-Dec. Lucent Technologies $0.25 $0.30 $0.10 $-0.25 to -.30 Nortel Networks $0.12 $0.18 $0.18 $0.26 *projected Source: Zacks The Deutsche deal won't reach Nortel's books for a while, however. And amid warnings from its peers, rumors have circulated that Nortel will fall short of fourth-quarter expectations. It's not out of the question — after all, the Canadian company revealed a decline in optical revenues back in October (though its earnings exceeded expectations). But as recently as Dec. 14, just two weeks shy of the fourth quarter's close, Nortel's management dismissed those market-cap eroding rumors and told analysts to expect earnings of 26 cents a share on revenues of $8.5 billion to $8.8 billion, in line with current Street expectations. Management also reiterated that annual sales and earnings growth would exceed 40%, fueled by 125% growth in optical Internet revenues. All that's fine, but gauging Nortel's overall future growth is tricky. Besides promising optical and wireless businesses, the company is still entangled in the slowing circuit-switching business, which is used for voice transmission (also one of Lucent's bugaboos). Anyone who's been following the telecom market recently knows voice ain't where it's at. So Nortel is hardly a sure bet. On Wednesday, in fact, Lauria downgraded the stock from Strong Buy to Buy because of faster-than-expected declines in the circuit-switching market. He also thinks there's not as much potential upside to growth forecasts in optical-networking systems and is worried about the company's exposure to the competitive local exchange carrier market. While Lucent is striving to regain the trust of customers, employees and investors, Nortel is struggling to live up to its high expectations. They have very different battles in front of them. But these are hardly the best of times for either company.