Stephens Inc. INVESTMENT THESIS on XTND
borrowed from our brethren on the raging bull site...
Stephens Inc.
INVESTMENT THESIS
Our investment case for Extended Systems is built on the assumption that Bluetooth
will gain widespread adoption within the next few years and that the Company will be
a significant player in the Bluetooth software market. We expect Extended Systems to
benefit as a royalty collector, receiving 12% to 15% of the cost of each Bluetooth
chipset. Demand for the embedded Bluetooth software should increase in tandem
with Bluetooth device shipments.
We expect automatic synchronization of files, appointments, etc., between personal
digital assistants (PDAs) and PCs without cables to be one of the first widely adopted
Bluetooth applications. We think Extended Systems with its synchronization
software, combined with its Bluetooth expertise, is ideally positioned to benefit from
this potential opportunity.
The Company’s XTNDConnect Server product is likely to be a beneficiary of the
expected strong growth in the wireless data market. IDC estimates that 41.5 million
smart handheld devices (data-enabled wireless devices) will be shipped in 2004, up
from 11.3 million in 1999. We estimate that, by 2004, 60% of these devices will be
used for wireless access to server-based content, creating a large market for server
syncing software.
Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, (501) 374-4361, FAX (501) 377-2666, Member NYSE, NASD, SIPC
Stephens Inc. Morning Meeting Highlights
October 12, 2000
COMPANIES MENTIONED IN THIS REPORT: VASC, BHE, ACXM, XTND
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Extended Systems (XTND; BUY; Price-$35.50; Target-$69) The Company will be reporting 1Q01
results on October 23. We expect XTND to meet both our revenue estimate of $10.6 million and our
EPS estimate of ($0.18), although we do not look for any upside to these numbers. The strong growth for
wireless data devices shows no signs of abating. Palm, Handspring and Research in Motion have all
recently reported very strong results. Near-term catalysts for the stock include Bluetooth product rollouts
and the announcement of new high-profile customers like Nokia. Analyst: Karan Sodhi, 617-239-7517. |
