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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (36412)	3/12/2002 7:46:40 PM
From: j g cordes	Read Replies (1) \| Respond to of 68070

Softechie.. welcome to the ancient TA for S&L board. What do you mean by assessment on LU? Short term bounce candidate, long term investment 401K candidate?

To: Softechie who wrote (36412)	3/13/2002 4:53:55 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68070

LU Warning CC March 12,2002 Earning call in April, still 3 weeks in Q to go confirming Q-Q pro forma improvement see 1 time charge due to new tax law signed last week see improved GM seeing delayed or reduced cap ex in last 3 weeks now guiding to modest to 10 percent rev growth as opposed to 10 to 15 per rev miss is due to delays in spending now competitve losses still expect top line improvement announced multi-year 400 mil contracts in Europe at CEBit miss is more of a timing issue will be Q3 before Agere spin out don`t expect profitability till 2003 now long term LU is still in a large market, 200 bill will get spent this ear by carriers despite cap ex cut have sufficient cash for business plan now, will try to reasie capital as markets allow though no draw down on credit facility Rev are light due to weakness in INS wireline products, affecting top line growth, no shift in product buys, slow down in cap ex seen in last 3 weeks, corresponds to recent carrier announcements seeing solid growth in wireless still expect improved GM, 20 percent or great is achievable due to reduced cost and fewer one time charges tareting 35 per GM long term new tax law always operating loss to be carried back 5 years instead of 2 expect Q2 6 cent charge as a result Q) 2 weeks ago LU was guiding to 10 to 15 per growth, waht is different todayÉ A) In last few weeks LU has seen a significant change in the spending plans of carriers. Funnel order tracking system seeing more delays and more constrainted spending. Asa result LU did not see the high end of rev guidance being met. Now guiding to modest to 10 per growth. Seeing a tighter hold on spending as carrier focus on the bottom line. Result correspond to carrier announcements. Q) Tax law details? A)Still working on details. Expect benefit to exceed 6 cent charge significantly. Q)Business mix? No change in mobility. So did INS wireless dip Q-Q? Geography ofdip in orders? All inUS? A) Comment on Q-Q growth was overall. No segment guidance. Mobility is seeing solid growth. General tightening in INS segment. Still 3 weeks to go so mix could change/ Q) Biggest change due to INS business in US then? A) Yes Q) Softness in the last few weeksm but cpa ex cuts announced have be modest, why the miss by LU? A) seeing systematic slow down in cap ex across industry. FOr lU only seeing effects the last few weeks. Overall effect in absolute dollar term is small. Q) Wasthe 10 to 15 rev growth guidance justifed then given that March is usually a down Q? A) Yes, absolutely. Note that rev miss is low in aboslute dollar terms. Q)Op Ex improvement Q-Q still expected? A) Op Ex down 3.6 bill so far or 900 mil per Q. Expect improved Op Ex. Q) Saw optical wins, Was there strength in metro then, any other areas of strength? A) No details yet. New product developments are on schedule. Q)Slow down was in N. Amer then? Color by segment? A) Nothing specific within wireline segment yet. Q)Wireless growth. Only in US? What about Latin Amer. China Europe? A: Within and outside US. No details yet. Q) Impact of convertible on credit facility? A) None. Last Q in compliance with credit facility. Expect to remain so. Q) 400 mil contract will in Europe. Break down by carrier and segment? A) Carriers: France Telecom, BTT, Hughes, KPN, .... Prodcuts: Metropolis, Eon, GC550, Stinger, No details on dollar amounts Closing comments: stil expect rev growth, Agere spin off in Q3, 2003 before profitable,still expect GM > 20 per. , see bottom line growth better than top line growth

To: Softechie who wrote (36412)	3/13/2002 5:14:22 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 68070

Overall I would just avoid LU for now. It is so low down in price that is not worth shorting. On the other side it is seeing improved margins and still seeing growth in wireless. It is also seeing some traction in optical, which not many companies can say right now. The fact that it got the convertible done so quickly after the earnings warning indicates to me that they don't see conditions improving much near term. Otherwise I think they would have waited till conditions were better in order to get better terms on the convertible. So umless you see a lawsuit in the next few week from the bond holder over LU not revealing all material facts I expect telecom spend to be quite a bit weaker than expected. Given current conditions, I would not expect anyone to take more aggresive positions in telecom equipment stock till closer to Sept. Then they will be looking for sign of the predicted turn around. LU wirelesss strength has been in GSM networks which is strange as NOK has indicated weakness in network infrastructure. Note that NOK has no exposure in N. Amer to this segment. It is all in Europe, Latin Amer. and the Far East. NOK also indicated handset sales are on track. They are introducing new models. 3G rev have not been booked yet, but they are doing these types of infrastructure contracts. No forward guidance on handset sales. Seeing reduced inventory in the channels. Overall, not that bad a call. CMVT press release appears to indicate weakness in adding messaging service. Given carriers are focusing on profitable services, what does that say about next generation handset that focus on text messaging? Overall I would focus on smaller companies than LU in anticipation of a cap ex turn around. Long side Wireline: JNPR still has lots of institutional support and 1 billion in cash. Despite it high price to sales ratio, it has been a leader in re-bounds in the sector. ONIS for good metro traction. It is acting better than CIEN for some reason. Potential T contract that will ramp demand quickly. Potentila ramp was cited as one of the reasons for the merger with CIEN. GSPN for ADSL. ADTN for T1/T3 line growth and good cash flow, TELM: niche segment has been abandoned by NT and TLAB, leaves it as only nect gen SONET switch provider, enough money to survive down turn, no debt, reduced burn rate TXCC: In anticipation that T1/T3 growth will lead any busines recovery as that is where the money is for carriers Wireless: WFII : Infrastructure build out RFMD: handset amplifiers, wireless LAN's NOK: Dominant handset position QCOM: everyone has to pay them for CMDA technology, key technology to 3G deployment Most everything else is a short or an avoid.