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

To: Lou S. who wrote (7810)	5/8/1999 3:39:00 PM
From: KYA27	Read Replies (1) \| Respond to of 21876

bill,Whats your thoughts on why there is so many CSCO workers posting on these threads?The only people I see posting from LU are retired.Seems to me they have way to much time on their hands. thanks

To: Lou S. who wrote (7810)	5/8/1999 6:54:00 PM
From: Mr.Fun	Read Replies (3) \| Respond to of 21876

Thank you wragrep, it is nice to know someone out there appreciates my posts. Some thoughts: 1. I believe strongly that carrier network architectures will not converge to a single technology, despite all of the IP rhetoric. Customers are sufficiently diverse and carrier competition is sufficiently intense, that there is alot of benefit in trying to differentiate services along many parameters and avoid the commoditization inherent in the bits are bits Cisco vision of the world. DWDM technology will give carriers dozens (eventually hundreds) of independent paths through their fiber networks, why would anyone engineer them all the same way? Listen, I've been in the telecom biz since 1979 and convergence has been the word the whole time - ISDN, fiber to the home, ATM to the desktop, now IP everything. Networks have gotten more complicated every year, not less. 2. The biggest problem with the management costs of today's complicated network is the rats nest of incompatible software systems that have grown up to manage it. There are two ways to fix this: simplify the network or fix the software. 3. IP, ATM, SONET, even circuit switching will all play a role for the foreseeable future. DWDM and other optical technologies may be the real fundamental building block, not IP. Prediction: five years from now, SI boards will be filled with people talking about convergence to optical switching technologies that are only in the R&D labs today. 4. With the extraordinary growth in carrier spending, and the opening of international markets, it is a GREAT time to be investing in telco suppliers. LU, CSCO and NT will all do well in the long-run. 4. Lucent has extraordinary potential - LU and NT are pulling away from the field in optical, LU is taking market share hand over fist in wireless and could dominate in 3G, with ASND LU will be the number one provider of data networking equipment to carriers (behind CSCO only in routers), LU's R/Evolution strategy for voice switches is really enlightened and should allow them to take alot of share, finallly - LU is the only company that understands the need for integrated carrier software suites. Top line growth will top 19% this year and 21% in 2000 - not bad for a $30billion revenue company. Furthermore, LU has increased operating margins every year it has been in existence. There is a lot of room for further improvement. Look for EPS growth well in excess of 25% going forward. 5.. Cisco is in the midst of a major transition to becoming a real telecommunications supplier - at LEAST 70% of revenues come from products that end up on enterprise premises. Cisco has 45% share of these businesses which are growing 15% tops - how much more share can Cisco take? How bad will the pricing pressure get? Eventually Cisco WILL succeed in getting the recipe right in the carrier space. Already it dominates some important product markets - 85% share of internet routers, 80% share of multi-service access routers, 2nd place in xDSL (I'm sure Bill C. will give you an earful about this). But there are also problem areas - ATM switching is a troubled area, software is a serious weakspot, optical and wireless are non existent. Luckily, carriers don't really buy end-to-end and Cisco should do just fine inthe areas where they are strong. I think I'm rambling here. To sum up: I think Cisco's top-line will dip below 30% growth by a hair and operating margins will deteriorate slightly in the midst of this transition, yielding about the same 25% growth as LU, but vs. much higher expectations and an astronomical P/E. 6. I don't want to antagonize KY, but NT will do okay. They are very strong in optical. Topline growth will look like 15-18%, EPS growth will look like 18-21%. Not too bad, given the price.