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

To: Kenneth E. Phillipps who wrote (10409)	3/27/2001 2:40:28 PM
From: Techplayer	Read Replies (1) \| Respond to of 14638

Ken, NorTel is rumored to be buying a division of the Isreali company ECI Telecom called Lightscape. This was reported on Reuters last week. There are a couple of serious concerns that I have about the rumor. Of all of the players out there, why would NT select Lightscape. The rumor stated that NT would pay $600-800M for Lightscape. Right now the total market cap of ECIL is around 790 million dollars. It seems that NT could buy more than just the one component of the company for this amount of cash/stock. Overall, ECIL must be a broken company because they're trading at .7X trailing revenue. I find it difficult to believe that the engineering talent left at the company is the best that can be had. I wonder how many of the top guys have already bolted to other start-ups and more promising efforts. Lightscape announced a "God Box" at OFC. The God box concept is losing favor in the industry since a jack of all trades is a master of none. Additionally, product availability for the more robust optical network efforts in the US could be out several months if not more. Over that period of time, NT should expect to see the engineers take the money and run, eroding the intrinsic value of their acquisition and making it seriously difficult to ensure delivery of the product. LU bought an Israeli company called Chromatis in May 2000 for $4.5B and they never got anything out of it. Most of the Israeli engineers left and they've never delivered a product to customers. At this point in the game, it seems more prudent for NT to talk to more local efforts with real product and engineering expertise that can be used to ensure delivery on time and according to customer needs. NT's stock value has deteriorated so much that any failures in the M&A area can make it that much more difficult to buy additional companies and technologies in the future. Buying an Israeli based effort with no US customers at this point seems almost foolish. tp