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

To: David Hansen who wrote (21472)	1/19/2004 10:24:16 PM
From: elmatador	Read Replies (2) \| Respond to of 21876

After three years of declining earnings, breaking even is a considerable achievement. Lucent delivered zero earnings per share in the third quarter of last year. Analysts are divided over whether it will repeat the trick for the fourth quarter - Lucent's fiscal first quarter - when it reports earnings on Wednesday. Beyond that, three years of cost cutting and balance sheet repair have provided the foundations for a return to sustained profitability once top-line growth picks up. But caution is required - caution not reflected in the broad rally in telecoms equipment supplier stocks. Telecoms carriers remain parsimonious. Overall, industry capital spending is likely to be flat to up a few percentage points this year. Juniper Network's strong fourth quarter results, and other announcements such as Nortel Network's Voice over Internet Protocol contract with Verizon, would appear to confirm that while overall spending will be flat, there will be faster growth in next generation products such as internet protocol technology, broadband access equipment and high-speed wireless networks. This is not good news for companies with two feet in the past. Goldman Sachs analysts' estimate that 90 per cent of Lucent's business is in older systems, suggesting that its revenue growth will lag its better-positioned peers. Shifting into the faster-growing technologies involves considerable execution risk. Lucent is less expensive than Nortel, on enterprise value of just over two times 2005 sales compared with just under three times for Nortel. That does not mean that it is cheap. news.ft.com But caution is required - caution not reflected in the broad rally in telecoms equipment supplier stocks. Telecoms carriers remain parsimonious. Overall, industry capital spending is likely to be flat to up a few percentage points this year. Juniper Network's strong fourth quarter results, and other announcements such as Nortel Network's Voice over Internet Protocol contract with Verizon, would appear to confirm that while overall spending will be flat, there will be faster growth in next generation products such as internet protocol technology, broadband access equipment and high-speed wireless networks. This is not good news for companies with two feet in the past. Goldman Sachs analysts' estimate that 90 per cent of Lucent's business is in older systems, suggesting that its revenue growth will lag its better-positioned peers. Shifting into the faster-growing technologies involves considerable execution risk. Lucent is less expensive than Nortel, on enterprise value of just over two times 2005 sales compared with just under three times for Nortel. That does not mean that it is cheap