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Author: Canuckify Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5026  
Subject: Just my humble opinion.... Date: 10/24/2000 11:20 PM
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As a holder of NT, I guess that I am first dismayed at the reaction of the market in the afterhours, and (after a drink or two) somewhat amused.

First off, the stock is NOT off due to just a mere drop of revenue guidance here. Let's remember that their biggest competitor, LU, is a disaster. So people are somewhat skittish wondering if this is round #2. However, LU guided forecasts DOWN 7% from a lower base, and NT is guiding forecasts UP from a higher base. Hmmm... being a somewhat simple person, that seems pretty good news to me.

Throw in some concerns with respect to telco capex spending, however if you can look back at achived messages from here over the past couple of years, i am certain that this an old story. Telco's HAVE to spend more, to drive costs lower or they go out of business. And if you notice a lot of NT's recent wins, they have been outside of North America, where the optical buildout is way behind and the "overcapacity" in a non-issue. For a good read here, George Gilder's Telecosm is facinating.

Next, accounts receivables... CIEN put a scare into the market here saying that they had a CLEC go under that owed them some cash. It has been mentioned that NT is FAR more conservative that LU and CIEN in the a/rec, and the Solomon analyst this evening said that it may even be "overly conservative".

Yes, this is a disappointment. And yes, the stock will get taken out to the woodshed tomorrow. But, after all the "noise" clears, I can be reasonable certain that the demand for products in this arena will continue to be robust for years going forward, and in this market, I will stick with a company thats going to grow 30+ percent in both revenues and earnings. Thats at least 3 times the growth of the market, and after this punishment, its probably going to end up around 2X the multiple. Seems like a pretty compelling PEG ratio to me. Now, you only have to have confidence that they can grow at 30% per year...

Perhaps, these kinds of things are the best lessons for a diversified portfolio. Also, it shows how the analyst community in their rush to outbid the next guy (remember Amazon) with target prices, revenues, and earnings, seems to lose track of reality most of the time. And then investors, act all surprised when this continues to happen... so who's the dummy?
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