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To: Clint E. who wrote (15115)	1/16/1998 12:31:00 AM
From: Johnny Canuck	Respond to of 69962

Clint, I am trying to get confirmation of the slow down in capital expenditures through someone that works for one of the telephone companies here in Canada. He is away right now. I will let you know if I get any information. If true this could have a ripple effect into networkers on the WAN such as NN and even semiconductor companies in an indirect way such as AMD,MOT,and ALTR as a portion of their sales are to companies selling into the telecommunication industry. I have been waiting for a year to get TLAB at 36 dollars.or under. I might finally get it if the forward looking statements are not good. They have not issues a warning yet so I expect them to meet the estimates, whether they can beat the estimate as in the past is the question. TLAB has been in a modest down trend for a number of months although the long term bull trend has remained intact. It would have been an interesting short. Not being able to short NASDAQ stocks is really quite annoying. ANDW reporting tommorrow too. It should give some insight in to the current rate of deployment of PCS and GSM infrastructure especially in Brazil and the Far East. Technically it looks terrible. It is in a serious downtrend right now. Harry

To: Clint E. who wrote (15115)	1/16/1998 11:22:00 AM
From: j g cordes	Read Replies (1) \| Respond to of 69962

Morning Clint, Harry, all.. telcoms and transports, both require high roll over technology investments. Indicative perhaps of both is the announcement Philippine Airlines has decided NOT to take delivery of four 747s for $600 million. Jim

To: Clint E. who wrote (15115)	1/19/1998 3:15:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69962

Clint, I only have a partial answer on the possible slow down of deployment of telecommunications equipment by the telcos. My contact does not have any information on the BEL and SBC situation in particular, but has some input on the telecommunication situation here in Canada and I believe the regulatory environment is similar in the US. The ANDW conference call also offers some information on the telecommunication deployment in Asia and South America. In Canada there a possiblity of a slow down that might last for the first 6 months of the year. The Canadian Telcos are currently going through de-regulation like in the United States. As a result, the telcos are going through a change of accounting for their deployed equipment , which in the past has been accounted for under regulatory accounting principles(RAP). They are switching over to the standard general accounting principle (GAP) used by most public companies. As part of the accounting change over, all past capital equipment expenditures under the regulatory accounting principles are being written off all at once. After the change over, they will be allowed to write the equipment off in the year they deploy it. Not all telephone companies are doing this at the same time, but most of them should have completed the change over in the next 6 months. As a result of the change over some project will be put on hold. But after the change over he expects spending on new equipment to accelerate , as projects that were not economically viable under old accounting rule now become viable under the new rules. He expects equipment expenditures to rise due to increased competition from the cable companies which want to enter the telephone market (especially the lucrative business telephone market). The telcos need to stay on the technological edge to supply new services or the cable companies will. In addition a rate increase hearing is coming up. By increasing the capital expenditures, they can demonstrate how unprofitable the telephone business is and ask for a large local phone rate increase, double current rates are possible. The ANDW conference call suggests that some telecommunication infrastructure project are being delayed in Asia,with particular softness in orders in Indonesia, Malaysia and Thailand. China/Hong Kong remain strong currently. ANDW deals mainly in wireless infrastructure, but an increase in wireless communications traffic will eventually translate into increased land line traffic at some point as portion of the existing telecommunications infrastructure will be land line and all long distance call will be land line. It is important to note that only 2 percent of the population subscribes to cellular telephone in this region and that land lines are not very practical in this part of the world. Sales to South America were strong suggesting that South America is continuing to aggressive ungrade their telecommunication infrastructure. As your contact mentioned Brazil's wireless build out is slower than anticipated. ANDW personnel feel this is because the Brazilain government is having problems finding bidder for certain territories, as a result the territories in high demand are not being released. This may suggest that the Telebras privatization may also be delayed. As such land line equipment expenditures may also be delayed in this region. There was no information as to how long. Europe was reported to be strong also. De-regulation in Europe lead to high demand last Q for ANDW as telcos tried to ungrade their equipment to get a competitive advantage before the de-regualtion on Jan 1,1998. ANDW anticipates futher expeditures as competitor build out their networks. I believe this will apply to land line as well as wireless. As for the US, I noticed that many of the regional companies are trying to get permission to enter the long distance market as the regional markets are not as lucrative. In the opinion of the FCC none of them have opened their local telphone markets sufficiently to qualify for them to enter the long distance market. A recent court ruling has struck down the FCC ruling as unconsitutional as it oversteps the state regulatory bodies. In the case of SBC, the state body to recommending that they get a long distance telephone license. This might be one of the reasons the analyst who did the report on ADCT is predicting a slow down in new equipment demand as SBC may wait for the court ruling to be decide before deciding where to allocate its equipment budget. Looking at the last 10Q's for ADCT, TLAB and LU they do not break out revenues by geography. The news releases on Jan 15 mentioned that the slow down was due to a temporary slow down as a result on acquisitions by BEL and SBC and usual season weakness in earnings between Q4 and Q1. It also mentioned that the result were weaker than usual for Q1. This confirms what was said in the NT conference call where it was stated that the carriers had spent their budgets earlier in the year, and that this reflected a change in the normal spending patterns of the past. The slow down is a delay not an overall slow down. But it should be there long enough for you to profit given your short time frame. Harry