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To: mishedlo who wrote (10299)	2/16/2001 6:47:52 AM
From: Hobie1Kenobe	Respond to of 13572

Mike - here's the take from Briefing.com on the NT blowup and competitive positions. Maybe this will help. JF3 20:31 ET ****** Nortel (NT) 29.75 +0.20: It was the best of times. It was the worst of times. Ciena (CIEN) and Nortel are the two cities in this tale. As we cautioned in our earlier Story Stock on Ciena, it was very important to learn the correct lessons from the company's strong earnings report this morning. Our conclusion was that companies with exposure to fewer but stronger carriers and whose business was focussed on equipment which reduced network costs, such as optical switches, would fare better than companies such as NT which had broad exposure to carriers and product lines. It didn't take long to get support for that conclusion. Nortel's downward guidance was rather severe -- Q1 revenue guidance was taken down to $6.3 bln from $8.1 bln. On the conference call, NT didn't mince words about the source of the unexpected weakness; it was the US and it was primarily optical. As the company put it, carriers are investing in utilizing capacity in existing routes but are not looking to build new routes until every network is fully utilized. This actually fits in relatively well with Ciena's message; its DWDM equipment and optical switches can help carriers to increase capacity and reduce costs in existing networks. Nortel is also DWDM player, but it has been to slow to deliver its optical switch and has huge exposure to many other optical segments that build on legacy SONET (sychronous optical network) networks; the demand for which appears to be slackening even as demand for more cost-effective next-generation optical gear offered by Ciena accelerates. What we may be witnessing is a key turning point in telecom evolution. The wait has been on for legacy SONET networks to eventually become extinct as they are more costly than next-gen networks. But with capital flowing freely for years, carriers were building everything -- legacy networks and next-gen networks. With capital now scarce and carriers becoming more disciplined, they are focussing on equipment that can deliver revenue-generating services and reduce network costs. The telecom sector is not a monolith. Just as there was eventually a sifting in the Internet sector that distinguished winners from losers, so too will there be in telecom. Optical companies with exposure to legacy SONET equipment are a much more dubious long-term proposition; these include NT, Lucent (LU), to some extent Cisco (CSCO) given its Cerent acquisition, and Redback (RBAK) with its Siara acquisition (both Cerent and Siara developed boxes that build on legacy SONET networks). Companies that are better positioned to deliver next-gen networks are CIEN, Sycamore (SCMR), and Corvis (CORV). Note: after hours trading on NT saw the stock trading down to 22.75, off 7 from the close. - Greg Jones, Briefing.com briefing.com