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 : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (46403)	5/9/1998 5:59:00 PM
From: djane	Read Replies (6) \| Respond to of 61433

A couple Barron's references to LU and NT somewhat related to ASND Letter to the Editor Your article on overvalued stocks ("Too Far, Too Fast," May 4) targeted Lucent Technologies first. The article also cited a telecom analyst to predict a resting place for Lucent at its current level. I would have consulted a networking analyst, as well. Why? In defense of Lucent's stock price, one can argue that, in light of recent acquisitions a la Cisco, Lucent is aggressively moving into an adjacent territory, namely data networking/Internet protocol telephony, linking existing phone systems with data networks for the transmission of voice, data and video over the Internet. Lucent is on a collision course with the likes of Cisco. Can Lucent at this stage be accorded valuations higher than those prevailing in the telecom equipment arena, and move closer to valuations in the networking sector? Note that market value to sales is 11 times in Cisco's case, but only 3.6 times in Lucent's, although their market caps are much closer, $77 billion and $97 billion, respectively. Institutional ownership is only 42% in Lucent's case (the heritage of the widows-and-orphans days of Ma Bell?), compared with 66% of Cisco. Lucent may have more room on the upside, even in the short to medium term. DENNIS G. BUKI Bethesda, Maryland interactive.wsj.com _____________________________________________________________________ While Putnam International Growth is sticking with Europe for its bank stocks, it likes telecommunications stocks across the board. A favorite is Northern Telecom, Canada's massive telephone-equipment maker, which is positioned similarly to Lucent Technologies in the U.S. However, Northern Telecom shares can be bought at 1.9 times annual sales, versus 3.3 times for Lucent. Kamshad sees Northern Telecom cashing in on two ultra-hot businesses -- cellular telephones and the Internet. About 25% of the company's revenues come from making equipment for cellular phones, which are enjoying explosive demand. But a larger part of the story lies in the decidedly more boring business of making telephone switches. Switch-makers should get a huge boost from increased telephone-line traffic from the Internet. Most telephone operating systems are built on the assumption that an average call will last about three minutes, Kamshad says. Some predict the Internet could lengthen the average call by at least five times that amount, creating a huge need for switches. interactive.wsj.com