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

To: Stock Farmer who wrote (9411)	1/24/2001 11:07:15 AM
From: The Phoenix	Read Replies (3) \| Respond to of 14638

John, LOL!.. Always so diplomatic. Here let me see if I understand your argument. Nortel is able to allocate revenue to "market or customer segments" (they are synonomous) based upon who the customer is? I'm going to guess you have first hand knowledge of this - I'd certainly be interested to understand how they accomplish this. When they sell to a carrier who re-sells to an enterprise how do they classify this revenue? Just wondering... Anyway, your argument is an interesting one - that Nortel allocates revenue to market segments based upon customer. Seems like additional cost for what gain??? Anyway, I'll take your word for it. As you know most vendors do this by product line. More to the point however, if Nortel decides to go through the additional accounting of determining end customer/market type that doesn't really change the argument much. To use your analogy last year Nortel sold paper clips to carriers and enterprise customers and allocated revenue accordingly.. this year they're doing the same and are showing 8% YoY growth in the enterprise. Where your argument could hold up I suppose is if you assume that competitors allocate based on product line - which most do - and that their enterprise revenues are growing at a faster rate because of sales to non-enterprise customers. However, this argument loses steam when we all are aware that the weakest sector during 2H of last CY was carriers. And if this weren't the case the increase in sales of "enterprise equipment" sold by competitors to carriers would have to be ridiculously large to justify a position that Nortel isn't losing revenue. Since you like to simplify things I'll try to do the same. If the market for enterprise equipment in CY1999 was $20B and NT had 10% market share they would have sold $2B in goods. It's widely known that th enterprise market is growing at a 25%-30% pace and has been for a number of years ... sometimes a bit higher.. sometimes a bit slower. So in CY2000 the market is $25B (bottom end of the range).. and NT increases share 8% to $2.16B. To normalize and assume NT maintained share other vendors would have sold $19.44B ($18B x 1.08) for a total market of $21.6B. So where did the other $3.4B go? Your argument suggest that the enterprise market number is buoyed by $3.4B in sales that went to carriers? Is that the argument your attempting to support? Of course if this is the case then in CY1999 those vendors that mix carrier and enterprise did it in that year as well - right? So if again we normalize we'd have to take this carrier revenues out of the enterprise segment and put them into the carrier segment - reducing NT's market share over there..... and this just to demonstrate that NT is maintaining share in the enterprise market. Now, the fact of the matter is we don't have the all the details so this is a somewhat futile discussion. But I can tell you with pretty darn good conviction that NT is not holding their own in the enterprise and Nortel management would agree to this so I'm at a loss as to why you're trying to pusue such a position. The alternative view is that NT has less share in the carrier market. The truth probably lies somewhere in between..... OG