Holey Moley! What's the deal with Lucent???

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They're dropping like a rock with astronomical volume in after hours trading.

-- Ron Schwarz (rs@clubvb.com.delete.this), January 06, 2000


Announced lower than expected earnings.

-- Johnny (jljtm@bellsouth.net), January 06, 2000.

Check the Nasdaq and Nasdaq-100 on the globex overnight trading.



-- Ray (ray@totacc.com), January 06, 2000.

Look here http://www.bloomberg.com/bbn/topsum.html?s=7efb99863be633be7564ed7c3bd 16937

-- H.H. (dontscrewme_2000@yahoo.com), January 06, 2000.


-- Carlos (riffraff1@cybertime.net), January 06, 2000.

A "momentum" market: on the way up, it's "euphoria"; on the way down, it's "panic"...


*Update* The Real Deal, By James J. Cramer

1/6/00 6:09 PM ET

...This is the real deal. A major blowup of a major company. Now we find out what this market -- or markets, judging by the NDX vs. the Dow -- are made of.

Even as I write, many Nasdaq stocks are offered down 4 or 5 and they are trading. In size. In major six figures. Institutions are panicking. They are throwing away stock at any level buyers can find.

Lucent (LU:NYSE - news) encompasses so many different areas, from telecommunications to semiconductors to dot-com equipment. To ignore it, even if there are execution issues, is to play ostrich.

I know this: Lucent missed the boat by a mile. (And, by the way, Herb Greenberg warned that this was going to happen on our show, and I am sure glad I listened, even as I feel terrible for the holders and all of the people who work there in my hometown in Jersey.)

Therefore this is not one of those situations where the collateral damage will be slight. It will be heavy. Oracle (ORCL:Nasdaq - news), Sun Microsystems (SUNW:Nasdaq - news), Intel (INTC:Nasdaq - news) and Microsoft (MSFT:Nasdaq - news) will be impacted. (I know this because they are trading down heavily as I write.)

This blowup is tailor-made for the bears. Let's respect their right to maul and maim at will tonight and tomorrow.

What I have not done is buy any Lucent at 54 where it is trading aggressively. Too early. Too hard. Too, well, nightmarish.

One final thought: For those of you who would think the market is just plain over, remember that this market has weathered shortfalls and problems from everything from IBM (IBM:NYSE - news) to Intel, from Merck (MRK:NYSE - news) to Microsoft. To give up because of Lucent seems a little rash, even as it would seem to fit the short-term bill...

-- DeeEmBee (macbeth1@pacbell.net), January 06, 2000.

Gateway supply line problems...Tech stocks down 10% in 3 days...and now this. No wonder Hoff hauled ass.

-- Count Chicken (before@they're.hatched), January 06, 2000.


Last night I warned that the NASDAQ 100 had just started a crash wave formation.The pollies and ignoramouses laughed--to lazy and stupid to verify some fundamental geometrical laws of the universe.

The time frame was sometime in the next few days.

The downside target is a well-known Fibonacci ratio.

Site is www.wavechart.com

I also said that this guy's major trend wave count has never been wrong! Only a RARE triple-extension had delayed what was building since last October.

I can't give out his targets here, but what is interesting is that he may have even predicted what could be a UNIQUE occurence--the Nasdaq 100 CRASHING while the DOW itself goes down by "only" ___%!?

Remember that the Nasdaq has been around only since 1971(?), so the only time in history it has crashed has been 1987.

One way this could happen is a "flight-to-quality", wherein anyone lucky to get money out of the Nasdaq puts it into the DOW, OR the fact that the DOW has "circuit breakers" that allow only certain drops before trading curbs kick in and the exchange is halted. BUT THE NASDAQ, AS FAR AS I KNOW, HAS NO CURBS?

Someone correct me if I am wrong here.

BTW, I have NOTHING to do with the site. I am a subscriber, that is all.

Greedspin, got PAMPERS? GOT TP?

-- profit of doom (doom@helltopay.ca), January 06, 2000.

profit of doom and Ron:

This afternoon at work I was reading a quotation from Fleckenstein's Wednesday Contrarian to the company treasurer, and suddenly I had this thought:

If enough NASDAQ investors decide all at the same time to sell their shares and get DOW climbers, then that sudden massive sell off would be a genuine panic, causing a massive downward correction. So even though the DOW goes up, the NASDAQ goes waaaaay down when everyone rushes out ASAP. Does that fit in with what *me* predicted at the beginning of this week? -- when the NASDAQ crashes, it will bring down the DOW and S&P with it.

Do you think Greenspan will be able to bail out the NASDAQ?

-- dinosaur (dinosaur@williams-net.com), January 06, 2000.

Maybe they can borrow a few hundred billion from the IMF, dino...LOL

-- a (a@a.a), January 06, 2000.

I wouldn't venture to guess exactly what we'll see, other than to say that I get the feeling that we're at that stage where a car has just started to run off the road on a curve, and the driver begins to realize that things are bumpier than they should be, and at the same time, realizes that he's not going to be able to steer it into recovery.

I'm seriously considering setting the VCR to ELP and recording CNBC tomorrow morning for posterity.

-- Ron Schwarz (rs@clubvb.com.delete.this), January 06, 2000.

Lots of truly PO'd analysts at present:

The Street.com

*Extra* Why It Was Only a Matter of Time for Lucent, By Herb Greenberg (Senior Columnist)

1/6/00 9:16 PM ET

The moral of Lucent (LU:NYSE - news) (and repeat after me): In the end, fundamentals do matter ... fundamentals do matter ... fundamentals do matter.

The "mattering" usually takes longer than you expect. Back in October, on "TheStreet.com" on Fox -- eight months after this column first noted concerns about Lucent's fundamentals -- I said (as part of our predictions) that I thought accounting issues would "catch up with the company, and come their earnings, the stock could suffer." Then, a few weeks later, the company reported a better-than-expected quarter -- so good, in fact, that it scared many a bear out of the stock. (Lehman Brothers analyst Steven Levy, one of the few contrarians, was among those to throw in the towel; he even raised his target early today before the bad news was announced.)

Among the reasons for the newfound respect: The balance sheet looked better. Or so it seemed -- in retrospect, proving itself one of the great financial fake-outs of recent time.

One notable improvement touted by the company was a drop in receivables days outstanding. However, a closer look showed the company had actually sold a chunk of receivables -- making its balance sheet look better than it really was. (No, I never wrote about that because the company, I'm sorry to say, talked me out of it by arguing that with the sale of the receivables went the liability associated with them. Note to self: Next time write the story with the response.) As it turns out, if you factored in the sold-off receivables, days outstanding actually rose by more than 10%!

"This company has been stretching the truth for more than a year now, but they were stretching the truth and they ran out of tricks," says Robert Olstein of the Olstein Financial Alert fund, one of Lucent's most vocal critics.

The company offered a host of explanations. But at the core of the issue, my sources say, is that the company's profitable circuit-switching biz -- those big old central-office switching devices -- is slowing. And one plugged-in source says that, in the U.S., Lucent's next-generation networking equipment is losing market share to Nortel Networks (NT:NYSE - news). What's more, as the negative analysts have been saying all along, Lucent's earnings growth was really never all it was cracked up to be. Much of it came from cutting bloated operating expenses inherited from AT&T (T:NYSE - news).

Reality? Balance-sheet tricks only work for so long -- and not nearly as long in turbulent markets as in bull markets. Of course, whenever I questioned Lucent, my Hostile React-o-Meter went spinning out of control. Sort of the way it is these days with the Lernahooligans.

P.S.: Kudos to analyst Eric Buck of Donaldson Lufkin & Jenrette. When I first wrote about Lucent last February, the column started with the line, "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." Buck was one; Levy was the other. Buck, who never recommended purchase of Lucent, stuck with his conviction. And while the stock is higher than it was when he initiated coverage (initially with a sell), any Lucent investor reading his reports wouldn't have been blindsided. "It's a great company," he told me yesterday. "They just over-promised on what they can deliver in terms of their long-term growth rate."

-- DeeEmBee (macbeth1@pacbell.net), January 07, 2000.

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