[Westell prospects]
Mark,
I think Westell may have some tough times over the next few months, unless they have some huge contracts to announce soon. That conference call revealed the general impression of Westell as a generic box builder in an industry that quickly commoditizes its products, modems. Add to this the revelation, toward the end of the call, that commercial quantities of DMT silicon may not be available until mid 1998, and you have a company on the ropes short term. If they make further acquisitions, it may be a near term negative as well for the stock price (though it may make them a better company long term.) They have missed expected contracts for lack of DMT, and per the last conference call, the Amati purchase was meant to correct this. Though they may have closer ties to TI DMT silicon than prior to the Westell/Amati merger, they are no longer intimately involved with the brains at Amati. Because of this, their upside potential as a take-over candidate has also been negated to a large extent. Of course the uncertainty of the TI deal for the next month will also hang over Westell briefly. If another company gets Amati, the downside risk for Westell is *enormous*.
Having said all that, I think Westell made the best of a losing position in bargaining for the TI alliance. I think ratan may be correct in that Amati got fleeced, to some degree, because of a sweetheart deal between Westell and TI. By throwing Westell some bones, TI avoided at least one bidding war. I believe that some time in the first half of 1998 Westell will probably be priced right with good upside potential. I may invest then if I'm not heavy into something else (like a LU stock swap for Amati <G>.) I could very well have the timing off short term, having dealt with the whimsical nature of ADSL stocks before.
What are the top five small-mid Cap stocks on your radar screen? I've been in an Amati cocoon for some time now.
Regards,
Richard |
