Globespan Inc.(GSPN)entering tornado!! Below i've pasted a recent report on Globespan written by a well respected communications/ic chip analyst. This is in hopes that maybe a couple of the regulars on this superb thread, as i have great respect for your opinions, would maybe do a quick thumbnail analysis of this company. I'm sure that you'll start yawning upon finding out that they are the self proclaimed leader that is capturing market share in DSL chip solutions. DSL, heck, most people would say thats old hat right? Well if that so, then why has the stock risen 400% since the beginning of the year on increased volume with institutions snapping up every share in sight? Market cap currently topping 6 billion, so we're not talking about some penny stock here. Could this DSL company be entering a tornado? Heck, I'm on a 3 month waiting list with my phone company to have it installed. Lots of demand for it. Thanks in advance to any of you with an opinion on this subject.
GlobeSpan management (Armando Geday, CEO and Bob McMullen, CFO)presented at the Robertson Stephens Technology conference a few weeks back.
The highlight of the presentation was the compelling business visibility at the company; management indicated that the current quarter is proceeding in a robust
fashion even as visibility into the upcoming two quarters is firming up well.
We believe that such visibility is due to the company's dominant market share positioning at customers in what appears to be a ramping DSL marketplace. We believe that key customers Cisco/Intel and Lucent are ramping well and expect the company to turn on two additional major customers over the coming quarters.
As such, we continue to recommend that investors view GlobeSpan as a pioneering pure-play on next-generation access markets and rate the company's stock as a Buy.
The company's business momentum appears to be at a high and growing - the company expects to grow revenue for the March quarter by an additional 20%+, on a sequential basis, after posting 24% and 81% Q-Q revenue growth rates in the previous two quarters, respectively, even as backlog remains at a high.
Product shipments appear to be diversified in general. Symmetric revenue stayed strong, growing 10% Q-Q. However, the highlight remains the adoption of the company's multi-mode (DMT capable) product: it grew from about $1 million in the September quarter to about $6.3 million (30% of revenue) in the December quarter.
Customer activity speaks for itself and should satisfy ALL investors, in our view. Revenue growth in the December quarter was driven by continued strength at Cisco (34% of sales) and strong product adoption by new customers Lucent (17% of sales) and Intel (10% of sales).
New product development with a view toward enhancing system performance and cost continues solidly. Specifically, the company's highly integrated 4-port single chip DSP and a companion AFE chipset code named Forte, is sampling currently. Beyond Forte, we believe that GlobeSpan will introduce a product in Q4:C00 that can deliver any DSL flavor and subscribe to the Cisco formula of 'Any Service, Any Port' on a single chip. This 'ASAP' product could, when
accompanied by critical features such as port density and power consumption, substantially elevate GlobeSpan's product offering ahead of the competition, in our view. In addition, we believe that GlobeSpan will also elevate the current battle beyond the port count game as its delivers on the technology acquired from Ficon over the coming year.
Finally, GlobeSpan continues to place an emphasis on R&D investments (especially through
activities such as its recent two acquisitions). We note that in the current quarter, we are modeling
that the company will likely spend $9.7 million in R&D expenses, an amount that is likely more
than the entire quarterly revenue base of GlobeSpan's closest pureplay DSL chip competitors.
In effect, we believe that GlobeSpan is executing strongly and continues to enhance its leadership
position in the DSL space.Given this, we continue to recommend that investors view GlobeSpan as a pioneering pure-play on the access markets and rate the company's stock as Buy.
THE COMPANY: GlobeSpan is a leading developer of digital subscriber line (DSL) product solutions
including chips, chipsets, software and reference designs. The company's products are incorporated
into DSL equipment for use at customer premises and the central offices of telecommunications service
providers. DSL is a technology used to increase transmission speeds over copper lines which
comprises a substantial portion of the local loop, the connection between the telecommunications
service providers' central offices and their customers (residences and businesses). According to In-Stat,
GlobeSpan was the market share leader; reportedly about 50% of all ADSL solutions installed in 1998
were deployed using the company's chipset. Today, GlobeSpan offers a suite of products that include
all major flavors of xDSL, utilizing all the major modulation techniques in use as well. GlobeSpan was
originally under the umbrella of AT&T Paradyne Corporation and operated as the Advanced
Transmission Technology division, involved primarily in the development of advanced DSL
technologies. The division was spun out from Lucent Technologies as part of Lucent's divestiture of
AT&T Paradyne Corporation in July 1996 and commenced operations as an independent entity in
August of 1996. Given this heritage, GlobeSpan has been a pioneer in the development of DSL
technology and has had considerable field experience in the deploying of its solutions. The company's
genesis as a result, can be traced to the formation of the first DSL design team at Bell Labs in 1986, that
led to the development of the first DSL IC in 1989 and eventually to the shipment of the company's 1
millionth DSL chipset in 1999. GlobeSpan, Inc. is headquartered in Red Bank, NJ, and has about 180
employees. |
