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Technology Stocks : COM21 (CMTO)
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To: lsgs97 who wrote (2132)5/17/2000 3:30:00 PM
From: pat mudge   of 2347
 
Com21

Q2:00 Update: Demand Remains Very Strong, Upside Surprise Gated by Component Constraints

* Demand for cable modems continues to exceed expectations; However, component constraints will limit upside to our Q2:00 revenue estimate of $53.8M; Lower sales of DOCSIS modems as a % of revenue could have a positive impact on gross margins in the qtr relative to our 27% projection and lead to a smaller EPS loss vs. our $0.16) estimate.

* We would note that the component shortages cited above are specific to CMTO's OEM cable modem partner (TurboNet) and relate to the availability of DOCSIS PHY chipsets (not being sourced from BRCM); In addition, long lead times have limited CMTO's ability to ramp production of its own DOCSIS mopdems during the quarter to meet higher than anticipated demand.

* Overall, we do not view this as a long-term concern, rather a short-term issue that will result in a more back-end loaded quarter compared to prior periods; We therefore expect CMTO will exit the quarter with a strong backlog.

* Anticipate demand for cable modems will remain robust for the foreseeable future as virtually every cable operator has accelerated deployments and upwardly revised subscriber targets to meet strong enduser demand and maintain a first-mover advantage over xDSL providers.

* Separately, the company's DOCSIS CMTS and cost reduced DOCSIS modem remain on track for a late Q3:00 introduction;
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