**Interview with CFO*** Feb 16 2000 - Dow Jones News Service
2833 DJ 16-Feb-00 at 16:01:00 16:17
DJN =DJ NHC Commun/Test -2: Undervalued Next To Turnstone
>T>NHC
Symbol: BCE NT C/BCE C/NHC C/NT TSTN
Industry: CMT RTL TEL TLS
Subject: DJN DJWI DJS MMM STK WEI
Market Sector: NND TEC UTI
Geographic Region: CA CN NME ONT PRM QBC US USW
Product/Service: DCA DTE
Sylvain Brossard, vice-president of finance and operations for NHC
Communications Inc. (T.NHC), told Dow Jones that he believes NHC is
undervalued compared to Turnstone Systems Inc. (TSTN), the only company that
is directly comparable to it.
He said Turnstone, which went public on Nasdaq at US$29 a share on Feb. 1,
has a market cap of US$4.5 billion, while NHC's market cap is just C$160
million. On Nasdaq Wednesday, Turnstone is trading at 104.
On Feb. 3, two days after Turnstone's sizzling debut, NHC's stock gained 72%
to 14.00 in Toronto.
Both companies develop products that enable local exchange carriers to
remotely test and deploy digital subscriber lines (DSL) on existing copper
lines, Brossard said. But Turnstone's Copper CrossConnect CX100 solution can't
match the capacity of NHC's Virtual Cross Connect System, he said. "The
Turnstone matrix can handle up to 550 lines, while our solution can handle
3,200 lines," he said.
Officials from Turnstone weren't immediately available for comment.
NHC recently signed a two-year contract with an unidentified U.S.
competitive local exchange carrier (CLEC). The contract was originally valued
at C$20 million, but it was later amended and is now worth a minimum of C$26
million.
The company's share price declined C$3.45 following news of the amended
contract - announced Feb. 8 - due to confusion over the wording in the press
release about the amendment, Brossard said. The initial contract would have
seen the CLEC deploy 250 of NHC's Virtual Cross Connect units and the amended
contract set the expected number at 435 units, leading investors to believe
that the amended contract should have been worth more, he said. But the line
capacity in the 250 units was higher than the capacity of the 435 units in the
amended pact, a fact that wasn't made clear in the second release, he said.
The sale of 200,000 NHC shares by Canaccord Capital on Feb. 9 compounded the
decline, Brossard said.
Over the period from Feb. 7 to Feb. 10, the stock declined 36% to 9.45,
before rebounding to its current level of 13.00.
-Stuart Weinberg, Dow Jones Newswires; 416-306-2032 |
