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

To: John J H Kim who wrote (13767)	3/16/2004 9:01:52 AM
From: Harold S.	Read Replies (1) \| Respond to of 14638

I rest my case....... Credit Suisse First Boston Corp. (GP, ALK, AAI, AMR, NWAC, AWA, SKIL, NT, PFE, RL) 16 March 2004, 06:36am ET NT: Reit Outperform - NT announced that Douglas Beatty, CFO, and Michael Gollogly, Controller, have been placed on paid leave of absence pending the completion of the current independent review of the company`s 2003 and prior financial statements. Bill Kerr has been named interim CFO and MaryAnne Pahapill has been named interim Controller, both effective immediately. - Key Highlights: 1) We continue to have confidence that the magnitude of this restatement will be less than that experienced in Dec `03 ($122M in rev, $492M in accum deficit). 2) We view this as a positive and necessary step towards improving NT`s weak internal financial controls and processes. 3) We expect Kerr to be a short-term solution through the end of the review process. 4) Believe no formal SEC investigation is currently being conducted, although the company has been in constant communication with regulators since the announcement of the original restatements in 2003. - There are no changes to our revenue, earnings and cash flow growth assumptions given the potential magnitude of the restatement as the revenue impact will likely be less than 1% of total sales during 2003. Believe the auditors are targeting specific transactions related to restructuring liabilities as well as contractual liabilities relating to certain carrier contracts. - Maintain OUTPERFORM rating and $9 twelve month price target. The stock could continue to exhibit near-term share weakness due to investor uncertainty regarding the general lack of information on the restatement, upside in our revenue and EPS estimates more likely in H2:04 as opposed to H1:04 and continued underperformance by technology stocks. However, we would use this as a buying opportunity for longerterm oriented investors as we est the uncertainty regarding the magnitude of the restatement is alleviated over the next several months, the company continues to be well-positioned to benefit from carriers capex mix-shift (circuit to packet, UMTS), and valuation of NT shares are relatively attractive at 14x the highend of our normalized untaxed EPS range of $0.28 - $0.38.