PKTR ( +6 @ $27)growing in complex market
By Matthew Leising, CBS.MarketWatch.com
Last Update: 4:21 PM ET Oct 20, 2000 NewsWatch
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CUPERTINO, Calif. (CBS.MW) -- With pro forma third-quarter earnings beating expectations and increasing visibility with such blue chips as AT&T and Intel, Internet application infrastructure provider Packeteer is up over 30 percent since its earning announcement Thursday.
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10/20/2000 5:14:10 PM ET
Packeteer (PKTR: news, msgs) Friday closed up $6.19, or 30.8 percent, to $26.25. The company Thursday reported third-quarter pro forma net income of 1 cent per share, beating analysts' expectations of a 2 cent loss per share. These earnings results exclude acquisition-related and stock compensation charges. For the same period last year, Packeteer reported a pro forma net loss of 11 cents a share.
D.A. Davidson broadband communications analyst Kevin Giboney sees the Cupertino-based company only getting stronger in a market he says is complex but increasingly important. Packeteer's infrastructure systems allow business and service providers to prioritize applications and data streaming over broadband communications lines.
"A lot of it has to do with managing traffic across networks," Giboney said. "Customers have been able to reduce the amount of connectivity they need to maximize their bandwidth."
Since iniating coverage of Packeteer in June, Giboney has maintained a buy, which he reiterated Thursday based on the earnings report.
According to Giboney two factors are contributing to Packeteer's newfound profitablity: There is a growing awareness that networks are degrading, that network performance is not optimal, yet it is often unclear why, and companies are increasingly realizing that Packeteer's technology can help solve these network degradation issues.
The company has partnerships with AT&T, Intel and Compaq, this last including a deal worked out 10 weeks ago with 50 universities across the country to help prioritize what comes across academic connections. Giboney said that with the boom in such applications as Napster, which involve massive and time-consuming downloads, university networks have been extremely stressed. Packeteer's PacketShaper allows administrators to prioritize mission critical applications such as Oracle over less important but more popular features, Giboney said.
"We're really happy about (our relationship with) Compaq," said Packeteer President and CEO Craig Elliott. "It's one of the many relationships we have to get our products out in a broad component."
Giboney says Packeteer has the advantage of being the only company addressing these concerns. "It's a very, very powerful application and as of yet, they're the only one doing it."
To maintain profitability, Giboney said, Packeteer should continue to expand its business plan, its product line and its presence. He sees possible expansion into cable, DSL and satellite delivery markets.
Packeteer's recent acquisition of British Columbia-based Workfire Technologies is also a plus, Giboney said. Working with Workfire-derived Web acceleration technology, Packeteer launched AppCelera, which detects the connection speed and browser type of users to a Web-server and customizes graphic responses accordingly.
"This market is so complex and you need to address that complexity," Giboney said. "They're doing that very well."
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