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

To: Kenneth E. Phillipps who wrote (1250)	10/13/1998 6:17:00 PM
From: John M. Gelnieau	Read Replies (3) \| Respond to of 14638

Ken, I suspect that there is some truth to the cycle. I sell information systems today that a repackaged and upgraded every 90 days. Delivery is maximum 4 weeks on the most complex system I delivered within the past 18 months. When I first got into the business 20 years ago a product cycle was 12 - 18 months for delivery from the issuance of an order. As a result it is very difficult today for a customer to plan purchases for 18 months out when quantum leaps in technology can occur. My experience was that it became harder to forecast demand, aka revenue, as these cycles decreased because we no longer had the order/delivery cycle that necessitated such long term planning horizon with the customer. The other aspect is that price-performance is increasing at such a fast rate that when an order slips the revenue for the same capability can be reduced 15 to 30 percent by order closure. With all that said the key today is time to market (TTM). Leadership TTM is the result of product development, engineering, manufacturing, and sales and marketing. If Nortel Networks is able to drive the development cycle, and with its expanded customer base, as well as, new potential customer base from its competition, may be able to become a TTM leader which could result in substantial profit margin leverage. This I hope will be particularly true with regards to customers looking at breadth of product offering from Nortel going forward. Also, TTM in the communications business is a challenge for those that do not have the new breadth of a Nortel becuse so much of this technology has to work together. I believe Nortel has the opportunity to set some of the TTM rules going forward. This is why Lucent has to make a strategic aquisition soon in the data space and, Cisco has to do something on the other end. I still think, even though Chambers has distanced Cisco from Cienna, that Cisco and Cienna could make sense at some reasonable valuation. In any event Cisco needs a fuller solution to compete with NT and LU. Afterall, what is the market risk Cisco takes by not have a full voice/data solution. And what's the cost of R&D necessary to develop out the product line? I am in Nortel becuase of the Bay aquisition. I looked at the Nortel business and liked it; therefore, I opted for the .6 instead of cashing out. On a short term basis I think we both agree that it was a major mistake. I clearly misread Nortel investor sentiment regarding the Bay aquisition. However, long term I like Nortel's chances at being one of the top players in the global buildout of telecomm in the early 21st century. I am long term bullish on NT.