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To: jach who wrote (22627)	2/14/1999 3:17:00 PM
From: Paul Reuben	Respond to of 77397

......and more, more pain in everyone's neck.........

To: jach who wrote (22627)	2/14/1999 3:42:00 PM
From: Eric	Read Replies (1) \| Respond to of 77397

jach, It looks like you have lost any respect from anyone on this thread. We have all grown tired of your one sided evaluation. You don't respond to questions and continue to spam threads. I'm sorry, but your days are numbered on SI. Eric

To: jach who wrote (22627)	2/14/1999 9:15:00 PM
From: bluejeans	Read Replies (2) \| Respond to of 77397

Why Two Analysts Have Made Negative Calls on Lucent By Herb Greenberg Senior Columnist 2/8/99 6:30 AM ET From the "fundamentals eventually do count" department: Often when a company blows up you can look back and see one or two analysts who had veered from the pack by downgrading the stock but who, at the time, were considered irrelevant. Which brings us to Steve Levy of Lehman Brothers and Eric Buck of Donaldson Lufkin & Jenrette, who are staking their reputations on going against the grain on Lucent (LU:NYSE) with longtime recommendations that their clients avoid the stock. So what if it has gone straight up in their faces? Spend a few minutes with each, and read their reports, and you can see they're very serious when they say Lucent's fundamentals never warranted its stock's lofty heights (even though earnings were advancing at a healthy clip) and that one day investors will wish they had heeded their warnings. They're so convinced they're right that late last week both turned up the intensity of their concerns in notes to clients. "A valuation call on Lucent has fallen on deaf ears during the company's short-lived history as an independent company," wrote Buck, who has been negative on the stock from the day it was spun off from AT&T (T:NYSE) in early 1996. Added Levy, who turned against the company last August, "If the December quarter's issues are actually a sign of cracks in Lucent's armor, then picking the bottom could become an even more creative exercise than setting the price target for the upside." His current fair value on the company s 75 to 85; it currently trades at around 100. How can these analysts be so negative on a stock that is such a widespread Wall Street favorite? Can they really be right, and can some 30 other analysts be wrong? Or, as a Lucent spokewoman suggests, are they simply unfamiliar with Lucent's business? Familiarity is the least of their problems: Both are veterans of tracking telecommunications, having covered and/or worked in the industry for more than a dozen years. Familiarity is the reason they're so negative. ("When they say they have leadership in the networking field, that couldn't be further from the truth," Buck says.) And can some 30 other analysts be wrong? Happens all the time. ("I don't do this lightly," says Levy, who says he's "puzzled" about why so few analysts are concerned about what he perceives to be the company's creaky fundamentals.) One reason for the lack of interest in their opinions is Lucent's performance: Last year profits rose a robust 79%, capping off two impressive years of growth. But Buck says much of the bottom-line growth was the result of cutting bloated operating expenses inherited from AT&T. "The question," he says, "is how far can you go with that? They're getting near the completion of that process." He says that means earnings will have to grow more in line with revenue growth, which last year was 14%. The analysts raise other issues, including rising receivables and the contribution of non-operating issues, particularly excess returns on its pension portfolio. And Levy believes Lucent's pending merger with Ascend (ASND:Nasdaq) will create the mother of culture clashes. "If Ascend and Cascade had cultural issues, I can't wait to see Lucent and Ascend," he says. A spokeswoman, however, says Lucent still believes earnings per share this year will grow by 30%, and revenue by 20%. "We're very optimistic," she says. So are Levy and Buck. They say they've been hearing from more investors in the wake of the recent release of sloppy fiscal first quarter earnings, but most remain nonbelievers in their point-of-view. "I had the same scenario in Motorola two years ago," Buck says. "I made a negative call, and it was one of those stocks that when it was disappointing it went up -- because people thought they were buying a great technology stock at the bottom. Ultimately, fundamentals caught up with the stock and people appreciated having that contrarian view out there. I see the same thing now. People are buying because of the name, not the fundamentals." As we like to say in this space, fundamentals don't matter until they do. By then, of course, it's too late.