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To: IceShark who wrote (3075)	7/19/1998 10:48:00 AM
From: Joseph G.	Respond to of 86076

Dan, when T IPOed LU, they took the cash ($2.8B), did not give it to LU. Some can consider it as a ripoff, OTOH, I think more important was that T loaded off nearly all their environmental, Superfund, etc. liabilities into LU. IMO, the communications equipment boxmakers, which is what these Cos. do, is not large enough to warrant present valuations. And, it is not going to grow much in next 10 years. What is happening, CSCO fans think CSCO will eat LU lunch, and LU fans think LU will get CSCO action, but the truth is that the voice/digital markets are simply merging, without much expansion. Digital grew fast in the past when it was a small fraction of voice market, but the point is that the total can't grow fast because it is already large, and service Cos. can't shell out big increases for equipment, because their equipment budgets are already as large as can be. There are other Cos. in the business, but the total market is about ~$50B/year and the combined market cap of players is like $400B, so that's P/S = 8 for the total market. Competition heats up, margins slide, component (chip) prices don't drop as fast as they used to, Asia, Russia, LatAm can't afford to buy expensive toys - not a pretty picture. Suckers still use the Red Herring and the like estimates for future markets - the same estimates that two years ago said DRAM market is gonna be $60B in 1998. It's a joke!