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

To: zbyslaw owczarczyk who wrote (9375)	1/20/2001 9:15:20 AM
From: Kenneth E. Phillipps	Read Replies (2) \| Respond to of 14638

From The Globe and Mail - High PE of Nortel justified by growth in market share - Article is incorrect about Nortel trading at 50 times forward earnings. The truth is closer to 40 times forward earnings. "VOX Nortel growth story keeps stock alluring Friday, January 19, 2001 Nortel confirmed yesterday that it is still a growth story, if slightly less of one than it said it was two months ago. That's good news for its shareholders. Assuming it lives up to its guidance, Nortel is trading at about 50 times forward earnings. That, critics will say, is too much. But growth investments are not only about profits. Nortel is concentrating on revenue growth at the expense of the bottom line. That's why its operating margins are a meagre 3 per cent compared with Cisco's 25 per cent. Critics can quibble about this all they want; the market doesn't care. Investors seem to justify Nortel's high premium by arguing that there'll be time for improving the margins -- and cranking out the cash -- later. Now the trick is about gaining market share, which Nortel appears to be doing. Investors have been willing to pay as much as 100 times earnings for Nortel. They won't pay that now, but they'll more than likely pay more than 50 times, especially in a mixed market." archives.theglobeandmail.com;