Hi Mark,
Thanks for your insights. This doesn't contradict my speculation that Prodan was in a position to take an inside look at TERN and make a fully-informed decision about whether to work there. If TERN was a house of cards, I doubt he would joined them. He would have gotten an options package no matter where he went. You'd think he would want to join a company that offers an options package and ALSO has good long term prospects. Assuming there is a vesting period, most of the risk factors with TERN will be resolved before he can cash in his options.
By hiring away the CableLabs CTO, people
immediately think it validates their S-CDMA sermon and Gilder's
CDMA prophecy.....I know that TERN's
broadened future potential is what he finds interesting, not a
narrower cable-modem only focus which happens to include S-CDMA.
If you look at news that drove the stock price, it appears that hiring Prodan and Q4 earnings are what drove TERN's stock to its present levels. The "Gilder Premium" only managed to drive it into the 40's. It's also interesting that CMTO's stock didn't respond to their own good quarterly earnings release. It was TERN's earnings release that was the catalyst.
Ironically, I can see that hiring Prodan could boomerang on TERN. Given the political nature of standards setting bodies, I can see that CableLabs might want to hedge on DOCSIS 1.2 and S-CDMA for objectivity reasons.
Last week, we saw that several additional companies with an opportunity to do inside due diligence traded real assets for TERN stock. Among these is TYCO whom I wouldn't consider to be a naive company.
WRT to the technical issues, the best I can conclude is that S-CDMA has advantages over older cable plant and that it is a toss-up on upgraded plant. Going further, S-CDMA might have some disadvantages on upgraded plant. Is this an accurate summary? In the end, technical superiority may not be decide the standards issue. Business relationships, marketing strategies, politics, etc. will all be factors.
Even though TERN is morphing away from a pure play cable modem company, I still haven't seen anything to alter my strategy that the best way to play this segment is to own both CMTO and TERN. I have to confess that I've sold some of my TERN recently.
Hassell |
