Great chance to sell AFOP again Monday...
Post from RB on CABOT letter:
ragingbull.lycos.com
Smells like a P&D to me..
From the letter:
During 2000, the company sold products to 180 customers, including 3M, Alcatel, Avanex, Harmonic, JDS Uniphase, Motorola, Redback Networks, Scientific-Atlanta and Tyco Electronics...
ALA:
Alcatel claims to be the world leader in total terrestrial and submarine DWDM systems, in digital cross-connects, which contain the enabling technology for operators to offer high bandwidth services, and in SDH networks...ALA was just downgraded because of slowdown:
cnet.com
MOT downgrades:
cnet.com
Avanex AVNX cut:
cnet.com
Harmonic...HLIT Cut layoffs and reduced orders...AFOP CC was before this news:
Feb 06,2001
Harmonic to Cut Work Force
By 10% Amid Weak Revenue
Harmonic Inc. expects to reduce its work force by about 100, or 10%, and to record a related one-time charge of about $800,000 for the fiscal first quarter ending March 31...In November, Harmonic confirmed that AT&T Corp.'s AT&T Broadband unit wouldn't accept deliveries from Harmonic for the balance of the fourth quarter, reducing Harmonic's revenue for the period by $2 million to $3 million. In December, the company warned that its fourth-quarter loss would be wider than expected due to due to "challenging market conditions" and customers' delayed orders...
public.wsj.com
JDS Uniphase Nortel Corning JDSU, NT, GLW:
Friday February 23 5:03 PM ET...
And last week, telecommunications equipment maker Nortel Networks Corp NT, the world's biggest supplier of fiber-optic telecom gear, said it will post a first-quarter loss and lowered its revenue growth expectations for the year.
Other high-tech powerhouses like Cisco, JDS Uniphase Corp. JDSU and Corning Inc. GLW have recently ratcheted down expectations with slowdown warnings. And they won't be the last, said Walter Casey, co-manager of Bank One Investment Advisors' technology fund.
``The entire (telecom) area for awhile may be under a cloud,'' he said. ``There are serious finance issues, serious issues of profitability in customer base and in the supplier base and I don't think that's a short term issue.''
GLW:
cnet.com
JDSU:
cnet.com
CSCO:
cnet.com
From the letter:
Alliance has recently begun selling its wavelength management products. With the cost of actually laying more fiber somewhat high, telecom firms are turning to dense wavelength division multiplexing (DWDM), which splits a light beam into numerous wavelengths. It’s an easier and cheaper way to multiply their capacity! So you can imagine that demand for these components is huge!
In this category, Alliance offers products like fused fiber WDM couplers, filter WDMs and DWDMs, all of which basically combine and split optical signals of different wavelengths on a single fiber.
MY TAKE:
With JDSU and CSCO and NT giving foggy forcasts for the 2nd half of 2001 IMO AFOP is NOT cheap...A just put out a lousy picture today and CIEN was rosy but that is suspect since they are doing a stock offering...AFOP has some exposure to CIEN because they expect to sell them $1M worth of product in 2001...The last Q there was supposed to be a pushout of new products to CIEN that did not meet what the estimates were expected...I do not know why the revenue was not what was expected from them but the % gain for AFOP is ridiculous for their exposure to CIEN...The contract is not news and it is not that large...The CIEN account was already factored into the 1stQ 2001 numbers which represent only a 5% increase in sequencial revenue, this is including the CIEN order that was remaining from the 4thQ 2000...
Inventory returns were 3.3M for the last Q...
OPIS side was weaker than DWDM in 4th Q 2000 so the growth is expected DWDM...Look at the action in the DWDM field in the last week and you can see the downside...CIEN is the new customer that is expected to fuel growth but that stock is down huge after earnings due to the NT outlook...Back in February 2 when the CC happened AFOP was expected to get 5% sequencial growth from the $8.8M in 4th Q 2000...The OPIS products were not to be growth but rather DWDM, given the recent news there is some question if that is possible...DWDM revenue accounted for only 15% for 2000 and was expected to grow to 30% for 2001, Customers are JDSU, CIEN, ALA...etc.
Given the rich valuation and the revenue expextation of only $47M for all of 2001 and earnings of only $2.6M and eps $0.07 this stock is trading at a very rich valuation given the market conditions...OPIS revenue was already flat for the 4th Q so the focus and growth is DWDM...
Look at NT, JDSU, ADCT, OPLK, NUFO, and EXFO...They are all down huge...AFOP can't remain this strong long IMO...
Finally, OPLK is more AFOP's speed to begin with...Oplink Communication, Inc. (Oplink) provides a broad line of high performance fiber optic components and integrated optical modules worldwide to communications equipment suppliers. Oplink's bandwidth creation products substantially increase the capacity of fiber optic networks. The Company's bandwidth management products provide communications service providers with network intelligence, or the ability to monitor and manage optical signals to enhance network performance....Barrons did a spot piece with with George Paoletti and his take on OPLK this weekend:
interactive.wsj.com
NUFO $29 raised estimates for 2001 from $150 million to $240 million margins are expected to be in the 43-48% range...
AFOP $11 has estimates of $46M with margins in around 28%...
I am not alone:
2/23/01 Spotlight: Alliance Fiber Optic (3:12)
Audio Exclusive from Briefing.com
on24.com
Smelly smelly P&D to watch IMO... |
