"On the ADSL front, we view announcements this week from Analog Devices and BellSouth as positives for DSL CPE provider, Efficient Networks. ADI, which supplies DSL chipsets to Efficient, reported stronger than expected earnings on Tuesday, November 14. More importantly in our opinion, the Company noted it shipped eight million DSL chipsets in fiscal 2000, topping is previous guidance of seven million shipments and initial 2000 guidance of four million. ADI expects its DSL revenues to increase 75% in 2001 and also noted that DSL deployments in Korea, where Efficient customer Hanaro Telecom is the second-largest carrier, are rapidly accelerating. BellSouth announced this week that it expects to triple its DSL customers from approximately 200,000 in 2000 to 600,000 in 2001, a growth rate of 200%. BellSouth was a significant (top ten) customer of Efficient in the third quarter. We should note that these announcements come on the heels of strong results from Alcatel, which grew DSL line shipments 55% sequentially to 1.7 million in the third quarter and forecasted that lines shipped would reach 12-14 million from 5.8 million in 2000. The news across the ADSL front was not all positive, however, as DLEC Covad Communications adjusted its third quarter results downward due to delinquent payments from 14 of its ISP customers, five more than originally anticipated."
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