16-Sep-04 LUCENT TECHNOLOGIES, INC.
HYPOTHETICAL FINANCIAL MODEL
FISCAL YEARS ENDED

2004 2005 2006 2007 2008 2009 2010 2011 2012
TOTAL REVENUES
% Change Y-O-Y
$8,700 $9,222
6.00%
$9,960
8.00%
$10,956
10.00%
$11,942
9.00%
$13,017
9.00%
$14,318
10.00%
$15,607
9.00%
$17,167
10.00%
COST OF SALES
% Total Revenues
$5,220
60.00%
$5,533
60.00%
$5,876
59.00%
$6,464
59.00%
$6,926
58.00%
$7,550
58.00%
$8,305
58.00%
$9,052
58.00%
$9,957
58.00%
GROSS PROFIT
% Total Revenues
$3,480
40.00%
$3,689
40.00%
$4,084
41.00%
$4,492
41.00%
$5,016
42.00%
$5,467
42.00%
$6,014
42.00%
$6,555
42.00%
$7,210
42.00%
R & D
% Total Revenues
$1,262
14.50%
$1,199
13.00%
$1,195
12.00%
$1,205
11.00%
$1,194
10.00%
$1,302
10.00%
$1,289
9.00%
$1,405
9.00%
$1,373
8.00%
SG&A
% Total Revenues
$1,479
17.00%
$1,660
18.00%
$1,793
18.00%
$1,862
17.00%
$1,911
16.00%
$1,952
15.00%
$2,148
15.00%
$2,341
15.00%
$2,575
15.00%
TOTAL OPERATING EXPENSES
% Total Revenues
$2,741
31.50%
$2,859
31.00%
$2,988
30.00%
$3,068
28.00%
$3,105
26.00%
$3,254
25.00%
$3,436
24.00%
$3,746
24.00%
$3,949
23.00%
OPERATING INCOME (LOSS)
% Total Revenues
$740
8.50%
$830
9.00%
$1,096
11.00%
$1,424
13.00%
$1,911
16.00%
$2,213
17.00%
$2,577
18.00%
$2,809
18.00%
$3,262
19.00%
INTEREST EXPENSE
% Total Revenues
$322
3.70%
$225
2.44%
$200
2.01%
$175
1.60%
$150
1.26%
$150
1.15%
$150
1.05%
$150
0.96%
$150
0.87%
OTHER INCOME (EXPENSE)
% Total Revenues
$79
0.91%
$0
0.00%
$0
0.00%
$0
0.00%
$0
0.00%
$0
0.00%
$0
0.00%
$0
0.00%
$0
0.00%
INCOME BEFORE TAXES
% Total Revenues
$497
5.71%
$830
9.00%
$1,096
11.00%
$1,424
13.00%
$1,911
16.00%
$2,213
17.00%
$2,577
18.00%
$2,809
18.00%
$3,262
19.00%
TAXES
Tax Rate
$0
0.00%
$290
35.00%
$383
35.00%
$498
35.00%
$669
35.00%
$774
35.00%
$902
35.00%
$983
35.00%
$1,142
35.00%
NET INCOME (LOSS) FROM OPERATIONS
% Total Revenues
$497
5.71%
$539
5.85%
$712
7.15%
$926
8.45%
$1,242
10.40%
$1,438
11.05%
$1,675
11.70%
$1,826
11.70%
$2,120
12.35%
SHARES O/S 4,800 4,850 4,900 4,950 5,000 5,050 5,100 5,150 5,200
EPS $0.10 $0.11 $0.15 $0.19 $0.25 $0.28 $0.33 $0.35 $0.41
EPS GROWTH USING ABOVE EPS 7.54% 30.65% 28.69% 32.81% 14.67% 15.33% 7.94% 14.99%
INPUT POSSIBLE PRICE / SHARE $3.25 $3.58 $3.93 $4.33 $4.76 $5.23 $5.76 $6.33 $6.97
MARKET CAP. USING ABOVE PRICE $15,600 $17,339 $19,269 $21,412 $23,792 $26,432 $29,364 $32,617 $36,227
POSSIBLE PRICE EARNINGS RATIO 31.42 32.14 27.06 23.13 19.16 18.38 17.53 17.86 17.09
PEG RATIO USING ABOVE DATA 4.26 0.88 0.81 0.58 1.25 1.14 2.25 1.14
PRICE TO REVENUES USING ABOVE 1.79 1.88 1.93 1.95 1.99 2.03 2.05 2.09 2.11
PRICE / GROWTH FLOW RATIO 9.27 10.07 10.11 10.16 9.40 9.74 9.58 10.24 #DIV/0!

Price / (EPS + FWD 1Y R&D)
PGFR cheap = 5
PGFR normal = 11
PGFR high > 15