May 3, 2000
Dow Jones Newswires
Vixel Up 6%; Carryover From Tues. Lucent
News - Analyst
Dow Jones Newswires
By Katherine Hutchison
NEW YORK -- After seeing Tuesday's 73% surge in its share price carry
over into Wednesday's trading, Vixel Corp.'s (VIXL) shares have slipped
into negative territory.
In early trading, investors continued to register their approval of the
company's licensing agreement with Lucent Technologies Inc. (LU), driving
its shares up to 15% higher at 16. But the stock soon lost ground, recently
trading down 1/8 or 0.9% lower at 13 13/16 on volume of 3.9 million shares,
compared with average daily volume of 549,000 shares.
Vixel announced Tuesday that Lucent would use the company's Fibre
Channel switching technology in its OptiStar product line.
Although Vixel issued a press release Wednesday announcing the upgrade of
its Series 7000 switches to full-fabric service, Needham & Co. analyst Glenn
Hanus attributed trading activity to enthusiasm carried over from Tuesday.
"Today's news was in line with what we were expecting, and should have
been anticipated by anyone following the company," he said. "It's still a
positive development to see it announced, but the movement is mostly related
to carryover on Tuesday's positive news."
Vixel should begin receiving initial revenues from the Lucent agreement in the
fourth quarter of 2000 or early 2001, Hanus said. As far as how much
revenue it will generate, he said it's difficult to quantify but guessed it could
pull in about $500,000.
"It's all margin, since there's no cost of goods or other expenses," he said.
"It's good for the bottom line."
Hanus added that Needham hadn't yet adjusted its earnings estimates on
Vixel to account for the Lucent agreement.
Beyond the financial implications, what's key for Vixel, he stressed, is the
"strategic endorsement of a major OEM."
"Investors had sort of given this thing up for dead," he said. "It helps galvanize
people to see there is some real technology."
Vixel's stock has tumbled from its high of 53 1/2 reached on Oct. 1, the day
it debuted as a public company. It has since fallen hard, hitting a low of 6
9/16 on April 27.
-Katherine Hutchison; Dow Jones Newswires; 201-938-5394 |
