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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: George A. Roberts who wrote (6931)	8/13/1998 1:18:00 PM
From: KEN G	Respond to of 6980

George: No, Nortel is NOT to Lucent what Bay was (is) to Cisco. Nortel has an installed base nearly as large as Lucent and thus is "guarenteed" a continuing stream of revenue from upgrades etc. One of the reasons I like Nortel is that it's multiple is nowhere near Lucents and yet they are in the same business and they are doing great. Idon't know if Bay/Nortel is a good fit or if they have the management to successfully integrate the two companies but their business is booming . Cisco is so clearly the leader in data networking but there is not a similiar comparision in "telephony". As companies, I like Lucent better than Nortel but in that industry there are two class acts, Lucent and Nortel. KG

To: George A. Roberts who wrote (6931)	8/13/1998 1:22:00 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 6980

Hi George - You are asking the same question that all Bay shareholders of some duration are asking. Before you sell and put the money in Cisco or Lucent, I suggest you check the PEs of those stocks for the past four quarters. Both are around 55 vs 45 for a stock like Tellabs which has similar margins and growth to Cisco. When Bay and Nortel are averaged, they have a combined PE of about 45 for the past four quarters. An analyst on NBC yesterday pointed out that stocks like Cisco, Microsoft, Dell and Intel are the last stocks to drop in a major correction. He thinks they will drop in October. I think the downside risk for Bay and Nortel is less than Cisco and Lucent. Yesterday, there was an article on the front page of the Seattle Post Intelligencer written by a columnist from Blomberg News warning of the risks with high PE stocks at this time. All of this, of course, just my opinion. Ken