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Technology Stocks : Applied Innovation (AINN) - Network Mediation Systems
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To: LTK007 who wrote (17)12/4/1997 12:22:00 PM
From: Royalcoachman   of 468
 
The stock had a market capitalization of about $400 million at the high of 32. The company reported a long series of quarterly and annual earnings that exceeded 100 %. At 100% earnings growth, the stock sold for 80 times earnings and 20 times sales. With multiples like that, any failure to maintain the earnings growth will cause the price earnings multiple and the market capitalization to contract. When the earnings went away, so did the stock price.

This company has made switches in the past that are used by the telephone companies to control the internal equipment of the the baby bells. The new 4800 switch is the first entry into the trunk line switching. this is a huge market compared to the one previously served. I understand that the next switch, the 5800 is in development and will be ready to be shipped next year. This switch will obviate the need for POP's and bring internet access switching into the REBOCS. If U. S. West orders the product, the order can be as high as $40 million.

There are only 16 million shares outstanding, so an order that size can produce a great amount of profit per share. The company stands to make a lot of money on this new swithc and the business in their old products is still strong and the cash flow from their current business has funded the R&D for the new switches. The stock has a good following and has the potential to move up dramatically.

David Corna
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