Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Anonymous who wrote (19489)	3/15/2002 10:54:28 PM
From: matt dillabough	Read Replies (1) \| Respond to of 21876

Dow Jones News Service ~ March 15, 2002 ~ 7:37 pm EST By Cintra Scott Of SMARTMONEY.COM The Call: Sanford C. Bernstein analyst Paul Sagawa isn't afraid to swim against the tide with his recommendations. In fact, that's how he became a bit of a hero to telecom investors. Back on Sept. 28, 2000, Sagawa famously downgraded shares of Nortel Networks (NT) and Cisco Systems (CSCO), smacking both stocks with Market Perform ratings. Rival analysts at bigger firms widely criticized his call and held on to their Buy recommendations. In the 18 months since the downgrades, Cisco fell 71%, Nortel fell 91% - and Sagawa looked pretty smart. Which is why it's so baffling that Sagawa has been consistently wrong about rival Lucent Technologies (LU). On Feb. 22, 2002, Sagawa commented on Lucent's prediction of 10% to 15% sequential revenue growth in its fiscal second quarter. "[W]e believe LU is in position to meet this guidance and achieve the Ebitda [earnings before interest, taxation and amortization] conditions necessary to spin its stake in Agere ( AGR.A) to its shareholders," the report read. (Remember: Agere was formerly Lucent's Microelectronics Group, which was brought public in March of 2001, erasing $2.5 billion in debt from Lucent's books. Under the terms of this tax- exempt spinoff of Agere, Lucent kept a 63% stake, which it had planned to distribute to its investors by September 2001. But the company had to hit certain Ebitda targets before its lenders would allow Lucent to let go of this valuable stake.) At the time of this prediction, Sagawa recommended Lucent with his firm's highest rating, Outperform. That's the same rating he's had on the stock for years. (And note that his firm Sanford Bernstein has no banking business with Lucent.) The Reality: On March 12, 2002, Lucent reversed itself and said it expects to fall short of its revenue guidance, forecasting "a modest-to-10% improvement" instead. "Large service providers continue to reduce or defer their spending as they rethink their business plans and conserve cash, which is having an impact on our top line," explained Lucent Executive Vice President and Chief Financial Officer Frank D'Amelio in a press release. What's more, Lucent postponed the distribution of its Agere shares once again. "Due to continuing market softness, Lucent will not be able to use the results from the second fiscal quarter to meet the Ebitda performance condition, as defined under the company's credit facility, necessary to complete the spinoff of Agere," the press release stated. In other words, the mighty Sagawa was wrong on both counts. And the week only got worse for Lucent investors. On Wednesday, the company announced a $1.75 billion convertible offering of junk bonds to meet its liquidity needs. With junk-bond status, Lucent is paying a high price for this rainy-day loan. And since the bonds are convertible to Lucent stock, existing shareholders' stakes face dilution. On all this bad news, Lucent hit a new 52-week low this week of $4.70. Wait: Make that a new all-time low for the nearly six-year-old stock. And as of Thursday's close, Lucent was the week's biggest percentage loser of all the stocks in the S&P 500, falling 23.33%. Because he's currently traveling in Europe, Paul Sagawa was unavailable for comment on Friday. According to his assistant, Sagawa doesn't own shares of Lucent himself, although he used to work for the company. For the last word, we turn to a report Sagawa published the day after the March 12 warning. He wrote what's become a familiar mantra to his followers: " We would use any weakness as a buying opportunity and maintain our Outperform rating." Lucky for him he didn't follow his own advice earlier. For more information and analysis of companies and mutual funds, visit SmartMoney.com at smartmoney.com. (END) DOW JONES NEWS 03-15-02 07:37 PM

To: Anonymous who wrote (19489)	3/18/2002 6:03:45 PM
From: Anonymous	Read Replies (4) \| Respond to of 21876

Over a half a billion shares of this baby have traded in the last five trading days and we're now at a new all time closing low ... $4.78 today. Anyone venture a guess as to how much lower we'll be going? Does anyone really think they know what's going on? .... a very depressed ... and by the way ... I don't give a rodents rear end about Nortel ... I don't own any of their stock (and I do realized that they are indeed in the same boat and business as Lucent and therefore Lucent is guilty by association and sector relationship) ... ANON