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

To: Anthony Wong who wrote (1087)	9/30/1998 11:06:00 AM
From: Petrus	Respond to of 14638

NORTHERN TELECOM LTD. (NT) 31 1/2 -4 3/8. Once earning worries are let out of the bag, it is hard to stuff them back in. Or at least this seems to be the case following earlier earnings warnings by another large multinational equipment maker. Yesterday, this maker of telecommunications equipment indicated at an analysts meeting in New York that revenues for Q3 would be on the lighter side of Wall Street expectations, but noted that earnings for the period were still expected to come in line with Wall Street projections. Unfortunately, most analysts had bolted from the room after hearing the first part of the company's comment and failed to recognize that Nortel still expects Q3 earnings to come in line with Wall Street estimates of $0.38 a share. In the year-ago period, it earned $0.30 a share on revenues of $3.5 billion. Given a recent warning by the French telecom equipment maker Alcatel Alsthom, one can excuse analysts for jumping to conclusions. Yet, one day later, the stock continues to trade lower and has lost more than 22% of its value in less than 24 hours. It appears that while the company still expects Q3 and full-year earnings to come in line with market expectations, sales growth is slowing due to weaker demand from Asia and Europe. The company appears to have run into greater competition from rival Lucent Technologies (LU 70 5/8 -3 7/8), and has been on the short end of some wireless contracts in Europe. However, margins are still strong as Northern Telecom has managed to keep a lid on expenses. How long the company can manage to walk the high wire before earnings are affected remains to be seen. But it seems that the market has already made up its mind that NT will experience earnings problems before long, even though at present, NT still expects to meet Wall Street expectations, albeit on lower than projected revenue numbers.

To: Anthony Wong who wrote (1087)	9/30/1998 12:59:00 PM
From: Anthony Wong	Read Replies (2) \| Respond to of 14638

Nortel shares seen falling further biz.yahoo.com Excerpts: Most analysts were unhappy with a revenue warning issued at a New York meeting with Nortel executives, despite assurances by executives that the company would still try to meet consensus earnings forecasts. ''People start asking well, how are they going to do that?'' said Robert MacLellan, an analyst with Kearns Capital in Toronto. ''Besides, you don't by high PE (price-to-earnings multiple), volatile tech stock because they're going to make their earnings through cutting costs...You buy these stocks because you expect them to make their earnings through strong top-line growth.'' Rick Hutcheon, president and chief investment officer of CentrePost Mutual Funds, said Nortel's move earlier this month to slash 3,500 jobs was a leading indicator of the warning. ''All of a sudden we now know why they chopped 3,500 jobs -- trying to prop up the bottom line,'' Hutcheon said. MacLellan said analysts and portfolio managers were incensed by the implication in many media reports that those who attended the meeting did not understand what Nortel was telling them. He said many in the investment community were ''livid'' with Nortel. Kearns maintained its hold on Nortel but cut its target price to US$36 to US$40 from US$52. The brokerage also lowered its earnings estimates for 1998 to US$1.50 a share under U.S. generally accepted accounting practices (GAAP) from US$1.64.