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January 25 2004
Conference Call Notes and Observations
Lucent Technologies, Inc.
3 Months ended December 31, 2003

please see Disclaimer at bottom of report

This report was last amended on January 25, 2004.

Lucent Technologies, Inc. designs and delivers networks for the world’s largest communications service providers. Backed by Bell Labs research and development, Lucent, claims to rely on their strengths in mobility, optical, data and voice networking technologies, as well as software and services, to develop next-generation networks. Lucent, claims that their systems, services and software are designed to help customers quickly deploy and better manage their networks and create new, revenue-generating services that help
businesses and consumers.

Notes From Conference Call

Pat Russo – Chief Executive Officer:

1. Progress in cost structure as evident in gross margin numbers. Looking for top and bottom line improvements over time. Reporting Services as a separate segment for first time this quarter.

2. Have not seen evidence of increased spending, yet they are seeing signs of increased spending. Lucent feels market is stabilizing. Lucent is seeing unofficial mentions of increased capital expenditures budgets, and a stated commitment for providers to invest in their infrastructure. Hence, Lucent is cautiously optimistic.

3. Increased attention in a few opportunity areas. These include Services and goal to be leading global integrator. Feels the Services addressable market is $42B. Some examples are introduction of “wireless in-building product”, “security network”. US Government is another focus of business. This was an area that was defocused over the last few years. Expansion of global business is a high priority. Examples of global business is evident with Russia, Western Europe, Brazil, China and India.

4. Gaining traction in next generation optical networks. Significant next generation of optical infrastructure for China. Agreements were recently signed with China Unicom and China Telecom, worth $350M. These include all facets of Lucent’s Next Generation product portfolios These include CDMA2000, IP/MPLS core solution for China Unicom’s data backbone (based on work Lucent is doing with Juniper). Signed China Telecom for Lambda Unite optical switches and 5E-XC, Accelerate portfolio of VOIP solutions.

5. Russo mentioned, VOIP (Voice over Internet Protocol) as a long term opportunity. The migration process has begun. VOIP still in early stage. The VOIP solution is called Accelerate. Recent VOIP deals include Qwest, AirCom and Phonom. Lucent is engaged with many customers. There are some successes which can not yet be talked about in both US and Europe, yet Russo mentioned, “stay tuned”. We discuss Verizon’s selection of Nortel over Lucent for VOIP solutions below.

6. Opportunity being seen in Broadband Access, metro optical and high speed wireless data. Recent wins were Portugal Telecom, Arcore (2nd largest carrier in Germany) and teamed with Bell Canada. Broadband access lays the foundation for bandwidth hungry services like video.

7. On the Optical front, Lucent continues to win contracts. Russo mentioned Verizon with Metropolis and Lambda Unite. Mentioned that Beijing Communications also selected their optical solutions.

8. Lucent mentioned the advantages of a convergence networks, between optical and data networks.

9. Lucent believes there is pent up demand for high speed mobile data solutions. Lucent has been a known leader for years. Russo believes demand will increase as economies improve. Lucent is seeing demand for evolution-data optimized networks. (EV-DO). Lucent was pleased to see Verizon wireless announce their EV-DO initiative .

Frank D’Amelio – Chief Financial Officer

1. Revenues increased 11.4% from last quarter to .

2. Geographic revenue mix is 60% in US and 40% non US. Non US revenues were increased by $150m, from a resolution of previously delayed, but previously accepted project, yet revenue not recognized until this quarter, Mobility Services contract (we believe this is Reliance from India).

3. Gain of $64M, was recognized on sale of Corning shares. Shares were received in sale of optical fiber unit several years ago. Recognized benefit of $191M from a resolution of prior year federal income tax audit matters. This affected both Taxes and Interest Income. This included $68M for Interest Income. Lucent mentioned that this would have a future cash benefit of about $50M, with the balance reducing Income Tax Liabilities. This was not mentioned, but we are curious as to how this might affect future Net Operating Loss Carry forwards. We have seen future carry forwards negotiated downward in other situations.

4. When revaluing warrants, the non cash charges will be significant. The value of the warrants will change, based on stock price. If warrants were valued today (close to $4.70/share), the net non cash effect would be about $300M. The charge this quarter was $54M. The warrants are a result of a global shareholder litigation settlement. The remaining proceeds of the settlement are expected in late F2004 or early F2005. We discuss the Warrants mark to market issues later in our report.

5. Services business is considered a separate segment for the first time this quarter.

6. Mobility revenues were up 51% sequentially from last quarter. Much of this was due to the recognition of a prior revenue recognition delay. On a sequential basis , US Mobility revenues increased 29% to $637M. The non US increase included $150M of revenue from previous delayed contract.

7. INS segment revenue of $790M was down 8% from prior quarter. INS revenue decreased 18% in non US revenues. Decrease primarily due to slow down of deployment in China as certain phases of large projects are near completion .

8. Services Revenues were $466M decreased by 1%.

9. Gross margin decreased by 2% to 41%, yet the decrease was expected as last quarter had one time favorable items included in gross margin. This was emphasized last quarter. Quarterly gross margin percentages will be subject to volatility in future.

10. S,G&A increased $117M from prior quarter.

11. Research and Development declined by $43M, primarily due to a charge recorded last quarter in a UMTS write down.

12. Use of cash was $257M for quarter. Working Capital requirements increased by $50M from last quarter. capital expenditures decreased to $29M.

13. Cash and short term investments was $4.3B. DSO’s decreased from 67 to 63 days. Inventory turns increased quarter over quarter to 7.4 to 7.8 times. We use different figures on inventory turns in the ratio sections below.

14. Headcount at December 31, 2003 is about 33,000

15. Vendor financing commitments declined during the quarter.

16. There was a repurchase of $63 million of debt . During first quarter debt was decreased, but at a slower pace. This will result in an annual savings of $5M in interest. Since the initial actions of debt reduction in FQ4’02 , Lucent claims that they have reduced debt by 2.2B for 623M of common shares (this equates to around $2.9B of dilution, using $4.70 per share) and $550M in cash. Fixed Charges will be reduced by $135M annually. This includes the $45M of convertible debt offering.

17. Expects revenues to be flat to up from prior year. Expects that Lucent will end F2004 with a profitable year.

Question and Answers

1. Merrill calls Wire-line results as disappointing and questioned this decline. Lucent claims this was due to a slowdown of a China project which was near completion. Lucent points out that US portion of INS was actually up 3%.

2. Range of Operating Expenditures for next few quarters will be in the area of $650M to $675M. APEX for this quarter was $648M.

3. Not providing quarterly revenue guidance.

4. Question as to VOIP and mentioned Verizon selecting Nortel for their deployment. Lucent claims they are seeing various needs and priorities of RBOC’s and what RBOC’s are looking for. Qwest, selected Lucent’s Accelerate Solution and is replacing the infrastructure which will enable VOIP. Lucent admits that Nortel was the first to win the 18 month exclusive contract from Verizon. Russo stressed that Lucent is not excluded from current embedded base with Verizon.

5. Question as to how important US Government is into business. Russo mentioned that in the past US Government was important in Lucent history. During the difficult last few years, Lucent has defocused its Government focus. Lucent now sees substantial and material opportunities and is actively pursuing large deployments. Lucent expects US Government business to grow faster than the market.

6. Lucent remains market leader in CDMA. CDMA is growing globally. This is evident in Eastern Europe, China and India. Lucent claims to be participating in UMTS and Wide Band CDMA (WCDMA). Lucent has a trial with China Netcom in Shanghai.

7. Lucent claims that Juniper relationship is very good and moving along as planned. The goal of the comprehensive relationship is to touch the ATM installed networks and convert them into an IP and MPLS network.  There is an integration of Juniper products over Lucent’s Navis product portfolio. The relationship includes joint development and integration, as opposed to an OEM relationship.

8. Question as to network acceptance delay and revenue recognition. Frank claimed that most of the revenue was recognized this quarter. This delay was from an initial deployment. Lucent hopes to see additional revenues with future deployments that could arise from the current footprint. Russo expects that new revenues will happen as network is utilized and grows by increased subscriber growth occurs. Lucent fully expects that this network will get expanded. Russo claims that Lucent is in discussions to be part of the expansion.

9. Lucent hopes to profit from Verizon DC initiative with EV-DO. Lucent believes the trial went very well. Verizon announed their intentions to deploy the initiative nationally and Lucent hopes to be a part of that initiative.

10. Question as to future dilution. The significant net income change was the triggering event of FAS 128 accounting. Assumptions are based on exercise of options and convertible shares. This is offset by interest paid being added back. This will be detailed at length in 10Q. The dilution was caused by the warrants which were issued in the shareholder litigation settlement.


1. When wireless revenues are excluded, revenues were down from $1,393M in Q4’03 to $1,299M in Q1’04, or a decline of 7% . Wireless revenues included a $150M acceptance of previously delayed income. We have previously mentioned that we believe this to be the Reliance Infocom contract in India. Nevertheless, Wireless revenues were up 28% sequentially from Q4’03 when the $150M revenue discussed above is excluded.

2. Optical Networking revenues were down 9% and Data Networking were down 20%.

4. Lucent reminded investors to watch the VOIP landscape. They hinted for investors to watch Lucent announcements on “circuit to packet (c2p)” announcements and VOIP build-outs.

5. VOIP market is possible growth area. Lucent’s Accelerate product addresses the VOIP market. As discussed by Lucent, Nortel was selected by Verizon recently as it’s VOIP equipment provider. We have not disseminated the reasons for Nortel’s selection over Lucent. The Nortel selection by Verizon should be watched closely by Lucent investors. Future announcements of VOIP equipment providers should be watched as well. Lucent as a large legacy circuit switch installed base and market share will be interesting to watch as legacy networks converge to VOIP platforms. The argument of Lucent’s possible future in this area, was described by someone I know as the following, ” This is a very complex issue which could take a page or two to explore in detail, but here’s an overview.

NT has a working softswitch which has been deployed. Lu has a concept that will be ready in about a year. Verizon selected a working switch versus a concept. Lu has VoIP equipment like the OIU, Optical Interface Unit, that will allow the 5E to receive VoIP data. After VoIP switches are deployed, I would imagine that there would be lots of work in the 5E switches to allow them to receive VoIP traffic.

The big advantage that Lu has is the thousands of 5E switches presently deployed in the US. Lu will develop an evolutionary solution to VoIP that will enable the BOCs to evolve their existing 5Es to VoIP rather than pulling them out and replacing them with softswitches. This latter option would be extraordinarily costly and would be virtually impossible to justify with a business case.

Keep in mind that it took 25 years for the BOCs to replace their analog switches with digital switches, and this was when they had enormous cash at their disposal because of their monopoly status. So don’t expect VoIP to be fully deployed in a few years. The vast majority of subscribers couldn’t care less if their calls were switched with softswitches rather than circuit switches. Unless the BOCs will offer significant discounts, I just don’t see the drivers for universal softswitch deployment. Moreover, there are still hurdles to be overcome with VoIP like “dropped packets” that will affect QOS, and there are security issues.”

6. We have read that AT&T Wireless is trialing Lucent’s 3G/UMTS solution. We do not know how a buy-out of AT&T Wireless would affect the timing or the selection of a WCDMA deployment. We also have read that Lucent has WCDMA trials underway with T-Mobile, Telefonica and China Netcom.

7. DSO’s (Day’s Sales Outstanding) decreased from 67 days to 63 days from the Q4’03.

8. Gross Margin was 41%. This was down from Q4’03 gross margin of 43%. Lucent guided down gross margin during the Q4’03 conference call. The 41% Gross Margin was in excess of our anticipations. Nevertheless, this is merely one quarter’s reporting and we will merely continue to monitor the margins.

9. Lucent issued warrants in relation to its shareholder lawsuit settlement. The warrants are expected to be issued late in calendar year 2004. Until the warrants are issued, Lucent is required to mark the warrants to market. Hence, if Lucent’s stock price goes up, the mark to market of the warrants will cause a non cash charge, which will bring down GAAP earnings per share. CFO, D’Amelio mentioned during the call that if the warrants were marked to market at this time, the charge would be around $300M. Keep in mind that the price of Lucent common at that time was approximately $4.70 per share. This is a confusing topic and we will need to explore the full dilution levels as the 10Q is released. We have always emphasized the importance of using GAAP results as opposed to Pro-Forma results. This is a rare time that the warrant effect on eps should be considered during analysis.

10. Pension income was $201M. Hence if Pension income was not included as a reduction of operating expenses, operating income would have been $70M and not $271M. Lucent’s reporting seems totally GAAP proper. We just need to emphasize that the cash flow is not affected by this item and it is our belief that pension income should not be looked at as normalized earnings. Lucent’s operating margin is 12% as reported, without the pension income, the net operating margin would be 3.1%.

11. Focus on forward revenues. This industry has a history of lumpiness in both margins and revenue flows. The telecom networking industry is hopefully coming out of a depression, and at the same time remains both a disruptive and infant industry.

12. The big surprise for us this quarter was the dilution factor from the warrants. The warrants and dilution has a material effect on market capitalization.

13. Net Income $338M, less Pension Income inclusion of $201M, less tax benefit $101, equals net adjusted normalized income of $36M. Total fully diluted shares outstanding are 5,136M, hence eps would be 36/5136 or .007 per share, which is less than a penny.

Net Income                                                    $338M
Pension Income                                             ( 201)
Tax benefit                                                     (101)

Normalized Net Income                                 $36M

Fully Diluted Shares Outstanding                   5,136M

Normalized Earnings Per Share                     $0.007

14. Market capitalization with 4,178M shares (last quarters fully diluted) at a price of $5 would be $20,890,000,000, whereas market cap with current fully diluted of 5,136M would be $25,680,000,000. Hence market cap increased by dilution alone by almost 5 billion dollars. That is not minor dilution, especially considering that market capitalization was $10.5 billion at Q4’03 conference call.

15. Lucent’s price dropped about $1.00 off of its pre-earnings release high of $5.00, to a post earnings low of near $4.00. That is a drop of $5 billion dollars. The potential of that fall is that Wall Street adjusted Lucent for the new dilution and addition of 1 Billion shares.

16. We have heard, without confirmation, that Lucent had two 10% customers during the quarter. The two alleged greater than 10% customers are Verizon and Sprint.

17. Lucent has not proven itself in IP based products. Lucent abandoned several soft-switches over the last few years. Lucent has since teamed with Juniper in attempts to become a prominent player in this market. Customers of Lucent and most long term industry watchers, realize that Lucent needs to be a “show me ” company to the industry. Lucent, in our opinion has earned its “show me” status, as is discussed in many Financial Statement Analysis text books, billion dollar shareholder lawsuits, SEC investigations, revenue recognition methods, massive write offs from their mergers and acquisitions, as well as a golf course in the hills of Jersey. It is our belief that the convergence of networks from the traditional switch (PSTN) to IP based networks is in its infant stages. It is vital for Lucent to become prominent and threatening in this area. The team up with Juniper gives Lucent the ability to gain traction now. The margins with Juniper will be smaller than if produced solely by Lucent. We think the Juniper relationship and strategy is proper for Lucent at the moment. There has been discussion on , that Lucent and Sonus are looking to team up. This of course is mereley speculation and noise, yet, it was interesting to read.

18. We have read and have not verified that Lucent contributed $30M for post retirement benefit plans during the quarter. Lucent has previously discussed a $300M funding level for F2004.

19. Lucent will fund approximately $315M in either cash or stock sometime in calendar 2004 (our guess as to the timing, although Lucent mentioned “early F2005” during the call) for the shareholder litigation settlement.

Some “ back of the envelope” financial observations

1. Current Ratio (Current Assets / Current Liabilities) .

The following table lists prior Current Ratios :

December 31, 2003                                 1.39
September 30, 2003                                1.56
September 30, 2002                                1.40
September 30, 2001                                1.60
September 30, 2000                                2.00
September 30, 1999                                2.10
September 30, 1998                                1.50
September 30, 1997                                1.20
September 30, 1996                                1.20

2. Accounts Receivable decreased $390 million from Q4’03, sales increased $232M from Q4’03. Receivables appear to be managed properly, yet revenues are so low, that this ratio is not as valid. If Lucent ever reaches revenue stability, this ratio should prove to be a more useful indicator.

Accounts Receivable Turnover ratio (Sales/Average Accounts Receivable). On the face, this has shown improvement. Just another metric to watch.

The following table lists prior Accounts Receivable Turnover Ratios :

December 31, 2003                                    5.5
September 30, 2003                                   5.6
September 30, 2002                                   3.9
September 30, 2001                                   3.2
September 30, 2000                                   3.3
September 30, 1999                                   3.3
September 30, 1998                                   3.8
September 30, 1997                                   5.4
September 30, 1996                                   3.1

3. Inventory increased $58M. Again, if we extrapolate F2004 revenues to an arbitrary $8.5B, the Inventory/ Sales ratio would be 8%. Inventory / Sales Ratio at F2003 was 7.50%, F2002 was 11.06 %, F2001 was 17.12 % and 17.65 % in F2000.

Inventory Turnover ratio (Cost of Sales/ Average Inventory) . On the face, this has shown improvement. Just another metric to watch. We have calculated this by using trailing 4 quarters of inventory to determine the average inventory.

The following table lists prior Inventory Turnover Ratios :

December 31, 2003                                   7.2
September 30, 2003                                  6.6
September 30, 2002                                  4.3
September 30, 2001                                  4.1
September 30, 2000                                  3.7
September 30, 1999                                  3.7
September 30, 1998                                  4.2
September 30, 1997                                  4.9
September 30, 1996                                  2.8

4. Quick Ratio (CA- Inventory)/CL .

The following table lists prior Quick Ratios :

December 31, 2003                                    1.26
September 30, 2003                                   1.44
September 30, 2002                                   1.20
September 30, 2001                                   1.20
September 30, 2000                                   1.50
September 30, 1999                                   1.60
September 30, 1998                                   1.10
September 30, 1997                                   0.90
September 30, 1996                                   0.90

5. Research and Development was $292M, or 12.93% of revenues. At December 31, 2002 it was 18.75 % of revenues. The last known guidance I can recall regarding R&D is that Lucent claims it will level out at 12 %. This was discussed by Lucent in 2001. I believe that management intends on keeping the ratio in the 15% range.

The following table lists prior Research and Development to Sales Ratio :

December 31, 2003                                    12.93
September 30, 2003                                   16.50
September 30, 2002                                   18.75
September 30, 2001                                   16.53
September 30, 2000                                   11.00
September 30, 1999                                   13.10
September 30, 1998                                   15.05
September 30, 1997                                   11.54
September 30, 1996                                   11.59

6. Flow Ratio is 0.72. The Flow Ratio is desired to be less than 1.25. Here are the givens : Current Assets = $7,406, Cash = $4,277, Current Liabilities = $5,330 and Short Term Debt = $917.

The Flow ratio is similar to the Cash ratio, except it includes a reduction of short term debt from current liabilities. It is similar to the Quick Ratio.

Flow Ratio = (CA – Cash) / (CL – STD) = 0.71. Interesting to notice an improvement in this ratio over the last few years. Since the industry and company are in a depression, I do not believe that definite relevance can be established. On the face, it does look like financial management is being optimized.

The following table lists prior Flow Ratios :

December 31, 2003                                         0.71
September 30, 2003                                        0.72
December 31, 2002                                         1.09
September 30, 2002                                        0.76
December 31, 2002                                         1.48
September 30, 2001                                        1.52
September 30, 2000                                        2.85
September 30, 1999                                        2.35
September 30, 1998                                        1.69
September 30, 1997                                        1.36
September 30, 1996                                        1.26

7. Total Asset Turnover Ratio is ( Sales/ Total Net Assets). Generally, the higher the multiple, the more efficient the company. The industry standard, which I have quickly , unofficially and haphazardly appears to be between 0.80 to 1.10. Like other ratios here, this is merely a ratio to watch.

The following table lists prior Total Asset Turnover Ratios :

December 31, 2003                                        0.59
September 30, 2003                                       0.54
September 30, 2002                                       0.69
September 30, 2001                                       0.63
September 30, 2000                                       0.61
September 30, 1999                                       0.76
September 30, 1998                                       0.83
September 30, 1997                                       1.16
September 30, 1996                                       0.70

8. Gross Margin (Cost of Sales/Sales).

The following table lists prior Gross Margin Percentages :

December 31, 2003 40.7 quarter only
September 30, 2003                                       31.3
September 30, 2002                                       12.6
September 30, 2001                                       15.3
September 30, 2000                                       40.5
September 30, 1999                                       48.0
September 30, 1998                                       46.9
September 30, 1997                                       44.5
September 30, 1996                                       41.4

9. Operating Margin Percentage ( Operating Income (loss)/Sales). I believe that Lucent’s ultimate goal is a 10% to 15% margin.

The following table lists prior Operating Margin Percentage :

December 31, 2003 12.00 quarter only, includes pension income
September 30, 2003                                   ( 0.03)
September 30, 2002                                   (54.40)
September 30, 2001                                   (90.50)
September 30, 2000                                      9.40
September 30, 1999                                    14.00
September 30, 1998                                      8.00
September 30, 1997                                      5.80
September 30, 1996                                      3.10

10. Net Profit Margin Percentage (Net Income (Loss)/Sales). I believe that Lucent’s ultimate goal is a 10% margin.

The following table lists prior Net Profit Margin Percentage :

December 31, 2003 15.45 quarter only, includes pension income/tax benefit
September 30, 2003                                    (13.70)
September 30, 2002                                    (96.98)
September 30, 2001                                    (76.20)
September 30, 2000                                       4.20
September 30, 1999                                     17.70
September 30, 1998                                       4.40
September 30, 1997                                       1.60
September 30, 1996                                       1.40

11. Return on Equity (ROE) Net Income/Equity . There are more thorough ROE formulas, such as “The Dupont Formula”, but for this, we will use the simple calculation.

The following table lists prior ROE :

December 31, 2003                                        N/A
September 30, 2003                                       N/A
September 30, 2002                                       N/A
September 30, 2001                                       N/A
September 30, 2000                                       6.10
September 30, 1999                                       44.30
September 30, 1998                                       19.20
September 30, 1997                                       14.80
September 30, 1996                                       10.90

12. Long Term Debt to Equity .

The following table lists prior Long Term Debt to Equity :

December 31, 2003                                          N/A
September 30, 2003                                         N/A
September 30, 2002                                         N/A
September 30, 2001                                         29.70
September 30, 2000                                         11.60
September 30, 1999                                         29.90
September 30, 1998                                         31.20
September 30, 1997                                         49.20
September 30, 1996                                         60.80

12. Times Interest Earned Ratio . This ratio measures the ability to meet interest payments. Formula is Earnings before Interest and Taxes (EBIT)/ Interest Expense. This is also referred to as the “Interest Coverage Ratio”.

The following table lists prior Times Interest Earned Ratio :

December 31, 2003 3.98 Quarter only, includes pension income
September 30, 2003                                       (18.40)
September 30, 2002                                       (17.50)
September 30, 2001                                       (37.40)
September 30, 2000                                          7.90
September 30, 1999                                        13.00
September 30, 1998                                        14.40
September 30, 1997                                          7.10
September 30, 1996                                          2.70

13. Total Liabilities to Total Assets Ratio .

The following table lists prior Total Liabilities to Total Assets Ratio :

December 31, 2003                                           124.86
September 30, 2003                                          121.41
September 30, 2002                                          117.20
September 30, 2001                                            61.80
September 30, 2000                                            44.90
September 30, 1999                                            60.60
September 30, 1998                                            73.70
September 30, 1997                                            85.80
September 30, 1996                                            88.10

14. Weighted Average Shares Outstanding .

December 31, 2003                                               5,136
September 30, 2003                                              4,178
September 30, 2002                                              3,427
September 30, 2001                                              3,401
September 30, 2000                                              3,232
September 30, 1999                                              3,102
September 30, 1998                                              3,025
September 30, 1997                                              2,895
September 30, 1996                                                UNK

13. Total Shares outstanding are 5,136M. Current market price is $4.70. Hence, market capitalization is $24,139M. The current Price to Sales multiple is 2.85X , using revenues of 8,470M. If we add Long Term debt of $4,421M to the $24,139M Market Capitalization, we get a total Enterprise Value (EV) of $28,560M. The EV to Sales Ratio in this case would be 3.37X. It is interesting to note that Price to Sales ratio at September 30, 2003 was 1.24X.

14. Company was Free Cash Flow negative in the quarter. Net Cash used in operations was ($257M).

15. Altman Z would be an interesting calculation. I will continue another time.

Items which were not resolved and perhaps need to be reviewed

1. Discuss potential currency fluctuations. Frank previously mentioned at NYC analyst meeting that currency fluctuations do not affect Lucent.

2. Pension funding issue, has been and remains a future concern of ours.

3. Fully review dilution issues with warrants when 10Q comes out.

4. Review Net Operating loss issues and try and determine if Lucent forfeited any future NOL’s with an IRS settlement.

5. Review normalized earnings calculations and look at projected future cash flow. Compare this to EBITDA.


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