This article on IICX highlighted a new stock I was going to put on the spreadsheet.. COVD. There is an article on the front page of SI (under heading "1 internet stock to own now") and in the same issue of that group of aricles is the following article.
Feb 04, 1999
Covad Communications
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Roland Whitcomb of the First American Technology Fund provides the
following stock idea on Covad Communications (COVD 56 5/8). Below is the
write up.
Covad Communications is a recent IPO that was brought public a few weeks
ago. They are in the business of installing DSL equipment primarily to small
businesses. DSL is generally used to transmit high speed data over a traditional
copper telephone line.
"This is something that will have a lot of demand going forward," says Roland
Whitcomb of the First American Technology Fund, "This is the telephone
company's way of responding to the threat of cable modems." He mentions that
it is difficult to install a cable modem or a DSL. A technician must come out and
install an IP connection. For a DSL line, there is less work involved for a
telephone company to implement. Availability is a concern because DSL's
cannot be used everywhere. However, he believes that if someone is simply
looking for faster Internet access, a DSL would be a cheaper way to do so.
Covad's competitive advantage is that they are more efficient at installation of
high speed access lines than either telephone companies or cable companies.
Covad is "competitively priced"
Before going public, Intel was Covad's leading venture capital firm. Covad also
has strong relationships with, AT&T, Nextlink Communications and Qwest
Communications. "Those companies will help market Covad's service," says
Roland.
He adds, Covad operates in the core area that everyone is speculating on. They
are in a hot space, have very strong and experienced management, have good
relationships with other vendors and position within the industry... As a new
issue, they are not well known. Covad is expected to post revenues of $50
million in 99' and possibly $200 million in 00'. He mentions that Covads' stock
has a market capitalization of about $2.6 billion, which is high, but when
compared to other companies offering high speed Internet connections such
@Home, it is "competitively priced" and offers tremendous long-term growth. |
