Bruce:
I have in front of me an article estimating that
the LMDS equipment market will be $1B by 2005.
However, there are many entities fighting for
a piece of the pie: NT, LU (I am aware that
LU is working with NTRO, but LU contributes also
to the value of the equipment it sells), the
CSCO/MOT partnership (former Bosch Telecom unit),
NN (acquired STII recently), Siemens/PCMS (though
the health of PCMS is suspect), ALA...
There are also the mesh-based or ring-based
competing architectures based on high rate
P-P links using the equipment of Triton Systems
or others.
So, if we assume generously that NTRO will have
25% of the addressable market in 2,005, and it
will be valued at a P/S ratio of 4, with a discount
rate of 10%, I arrive at a value of about $400M,
i.e. $10/sh. So, the IPO price was about right.
The rest is fluff.
NTRO is a fine little company, but all it got from
the IPO was $40M in cash. Since it is still losing money,
and since the sector is competitive, there is not much
room for error. The stock price does not reflect this
reality.
Best regards,
Bernard Levy |
