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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Judy who wrote (4550)	10/5/1998 4:05:00 PM
From: Jack Kunkle	Read Replies (1) \| Respond to of 21876

NEW YORK -(Dow Jones)- Lucent Technologies Inc. Chairman and Chief Executive Richard McGinn Monday reiterated that the company is comfortable with analysts' estimates for 1998 despite a slowdown in demand reported by some competitors. Analysts are expecting the Murray Hill, N.J.-based telecommunications equipment giant to post $30 billion in revenue and earnings of $1.70 a share for fiscal 1998. French telecom equipment maker Alcatel (ALA) last month said slowing demand will drop its earnings below expectations, while Northern Telecom Ltd. (NT) said revenue for the third quarter will be below expectations. Motorola Inc. has been in the throes of a protracted slump, and smaller rivals Ciena Corp. and Tellabs Inc. have issued warnings. Dramatic changes in communication technology are feeding demand for more and more comprehensive services, McGinn said. There is an explosion of demand for more communication network capacity, cost-effectiveness and reliability, he said. Companies that can provide them will see no shortage of customers. McGinn said the trend toward consolidation among the equipment makers' customers isn't a threat to Lucent's growth because it is accompanied by vast technological change for the big players and an explosion in the number of upstarts. Consolidation will also continue among equipment makers, McGinn said, because of the investments required to meet demand. Amid fears about a slowdown in the once sizzling market for telecom equipment, speculation about market leader Lucent's acquisition plans has died down. Lucent executives haven't shed much light on the company's acquisition strategy. Because it was spun off from AT&T Corp. (T), Lucent had been barred from so-called pooling of interest transactions under accounting rules. That meant Lucent faced unfavorable accounting treatment for certain stock deals. But that ban expired Thursday, on Lucent's second corporate birthday, prompting much speculation about whether it will go on a buying spree. Experts believe the company needs to make a big splash in data networking. Archrival Northern Telecom recently acquired networking company Bay Networks, putting more pressure on Lucent. Ascend Communications Inc., a leading maker of "remote-access" networking gear, has been an oft-mentioned target, but some experts are saying that rumor has quieted amid recent doubts about the industry's growth prospects. Despite investors' doubts about the sector, Lucent has plenty of strengths. The company has firm relationships with the big telephone companies, including former parent AT&T, SBC Communications Inc. and Bell Atlantic Corp. - three carriers leading the consolidations among phone companies. Lucent is able to offer "one-stop shopping," especially to smaller carriers that want a single provider for all their equipment. For the largest carriers, Lucent appears to be well-positioned to integrate and help manage the networks crisscrossing the country. Some big carriers would rather wait for a Lucent product to come on the market than buy from an existing provider. Lucent has been so hot that its biggest problem may be maintaining momentum, analysts say. Since the 1996 spinoff, Lucent's share price has soared, despite a bout of selling this past week. Copyright © 1998 Dow Jones & Company, Inc. All Rights Reserved.