Burt, All Longs: spoke with Brian Turner with Radisys few minutes ago. He made several interesting comments regarding Radisys:
a. Block Trades of yesterday and today: He's aware of an individual who was selling large blocks of Radisys through Cowen and Co. Cowen and Company is not able to divulge the name of the person. Cowen and Co. has a "strong buy" rating on Radisys. It is obvious that if Cowen has a "strong buy" and one of their clients was selling large blocks, that the individual was selling Radisys for reasons other than the business of Radisys.
b. Regarding Turner's relationship with Price Waterhouse: he worked for Price Waterhouse but had no relationship with anyone in Price Waterhouse' auditing division. I think its silly to speculate that Price Waterhouse would tarnish their image for the sake of one of their former employees by issuing an "all clear" for Radisys.
c. VME revenue: He states that the VME market is currently about $1 billion and is expected to grow to $1.9 billion by the year 2000. Although 50% of Radisys income is derived from VME, the design life of VME is still good for at least another ten to fifteen years. Revenue from VME for Radisys should continue to grow, but become less of a percentage of their total revenue relative to newer PCi designs going forward.
d. PCi designs: Compaq's PCi designs currently account for $50 million but is expected to grow to around $1 billion by the year 2000. Radisys has several new designs which work with the PCi format and will capitalize on the the revenue generation from the PCi format going forward.
e. Intel selling shares: In order for Intel to sell shares they must first receive an "opinion letter" from Brian Turner. Mr. Turner has issued no such "opinion letter". The shares are unregistered.
f. Actually, Intel, today, excercised their warrant option of purchasing more Radisys shares - now I wouldn't call this a bearish attitude toward Radisys!
g. New EPM1 designs: The EPM1 designs offer OEMs the flexibility to design complete systems on this architecture without having to redesign the total system. This ability will cause cost design projections going forward for OEMs to decrease.
h. New EPM100 design: This design is based on the PCi architecture as Radisys continues to move more designs to take advantage of the increased speed of PCi.
i. Competition: He currently sees no serious competitive threat to Radisys designs or relationship with OEMs going forward. The most serious threat is the OEMs themselves. So far, though, Radisys has been able to design embedded systems cheaper for the OEMs than the OEMs themselves. It makes sense. Radisys' specialty is embedded computer design. If an OEM wants a new system, they ask Radisys to design a new system based on their own criteria - as an OEM why hire complete new engineering staff when the experienced staff is across the street at Radisys?
I'm more bullish today on Radisys given my conversation with Turner. I think you should see the block share trading begin to dry up and the shorts begin to seriiously cover their postions. Hopefully, the longs , both former and new will join in. |
