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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (1229)	4/10/1999 4:42:00 PM
From: gdichaz	Read Replies (2) \| Respond to of 54805

Since you mention you are watching LU and NT this view might be of interest to you. As have mentioned before, think owning both is way to go. But then I am conservative - well sort of. :-) Would suggest some discussion here re LU and NT as potential kings - both fit prince criteria at least already and don't see how LU could be considered to have a large enough market lead in any area where LU and NT compete - which seems to be across the board in telecom equip - to make LU a king and NT a nothing. Chaz too Talk : Communications : Northern Telecom (Nortel) To: Kenneth E. Phillipps (2396 ) From: Stocker Saturday, Apr 10 1999 11:36AM ET Reply # of 2398 DLJ **** DONALDSON, LUFKIN & JENRETTE **** DLJ April 8, 1999 Eric C. Buck, C.F.A. (212) 892-4264 Sam Kingston (212) 892-4698 NORTEL NETWORKS (NT: $73.50) #@ Nortel Scores At Bell Atlantic Range: Earnings Per Share 1999 vs 1998 % Chg 69-26 Old New P/E Ratios F1Q $0.35 vs 0.27 +30% (FY:Dec.) 2000E $2.65$ 27.7 F2Q 0.50 vs 0.41 +22% 1999E 2.25 32.7 F3Q 0.51 vs 0.42 +21% 1998A 1.86 39.5 F4Q 0.86 vs 0.72 +19% 1997A 1.55 47.4 Yield: .4% Market Cap.: $37.8 Bil. 5-Yr. Growth Rate: 15% Dividend: $0.30 Avg. Trading Vol.(000): 800 Book Value: $10.30 RATING: Buy Change: None 12-Mo. Target: $80 VIEWPOINT Nortel announced a significant win at Bell Atlantic for two product areas: 1) DLC (digital loop carrier) product. 2) An assortment of products that will allow Bell Atlantic to better migrate its network to packet from circuit. Included in this is the DMS supernode data manager (a product that serves as an appendage to any OEM class 5 switch). The announcement is noteworthy because Nortel is displacing Lucent with its DLC product and gaining a foot hold in Bell Atlantic's migration from circuit to packet. This contract award is one of two recent contract awards that showed Nortel winning market share from Lucent. We continue to favor Nortel with a Buy rating and an upwardly revised target price of $80. We maintain our cautious stance on the shares of Lucent. IMPORTANT POINTS The contract. Nortel's agreement with Bell Atlantic has the potential of reaching $1 billion and is made up of two components. The DLC component of the contract gives Nortel the potential of realizing $600 million in revenues over the next five years. We expect Alcatel (via DSC's Litespan 2000 DLC) to maintain its incumbent position at Bell Atlantic, while Lucent would appear to be the loser. The remaining potential $400 million is expected to be recognized from products that Bell Atlantic will use in its network migration from circuit to packet. Generates increased confidence in our long-term stance. As we witness yet another Nortel win at the expense of Lucent, we continue to believe that Nortel provides large cap investors with the best valuation and best positioning within today's telecom equipment market. Nortel has spent significantly more money in its R&D efforts (focused on packet technologies and migration paths to packet) over the past few years and we believe that this is paying dividends as the growth in the market place is being seen in packet based technologies. We continue to view Nortel as our best large cap idea and recommend it with a Buy rating.

To: Eric L who wrote (1229)	4/16/1999 7:48:00 PM
From: gdichaz	Read Replies (1) \| Respond to of 54805

To Eric: Info re NT for your watch list. Chinese premier's visit is symbolic of the way China will play Canada and US in telecom. Note that relationships of Northern Telecom go way back to when big wire telecom equip was first provided in China. This is now updated to wireless - both nascent CDMA and established GSM. In addition wire internet leading edge technology. Suggest this company is royalty watch at a minimum. Chaz too Talk : Communications : Northern Telecom (Nortel) To: Kenneth E. Phillipps (2444 ) From: Paul Lee Friday, Apr 16 1999 12:02PM ET Reply # of 2448 Nortel Networks to Build Digital Wireless Network Equipment in China Equity Investment, Contracts Coincide with Visit of Chinese Premier Zhu Rongji OTTAWA, April 16 /PRNewswire/ - Nortel Networks (NYSE: NT/TSE: NTL) will build digital wireless network infrastructure equipment in China to expand its presence in the burgeoning Chinese wireless market. In a series of agreements signed in conjunction with today's visit by Chinese Premier Zhu Rongji, Nortel Networks concluded additional equity investments of more than US$30 million in joint venture company Guangdong Nortel to initiate local manufacturing of cdmaOne and GSM wireless equipment for the Chinese market. Nortel Networks also signed agreements worth US$60 million with China Unicom for expansion of two existing GSM digital wireless networks in Zhejiang province. These agreements continue our 27-year history of investment in the Chinese market,'' said Robert Mao, CEO and president, Nortel Networks China. ''Now we look to the future, harnessing our innovation to help evolve China's communications infrastructure to deliver the integrated data, Internet, video and voice services of tomorrow.'' The Chinese Premier's visit included a preview of the future - the world's first public demonstration of cdma2000 third generation digital air interface technology for delivery of very high-speed (384 kilobits per second) data, video and other wireless Internet services. Today's preview also included a demonstration of sophisticated software for controlling quality-of-service over IP (Internet Protocol) networks. This software allows an operator to ensure the highest levels of transmission quality and reliability to users of premium services.