Well, I don't know how to put this gently:
Sycamore has 273M shares outstanding. And with revenues coming in at less than $60M/quarter, all of a sudden, the valuation picture looks extremely bleak.
Many capital equipment stocks end up trading at 3-4x sales.
$240M sales * 4 = $960M, or not quite $4/share.
Of course, if you believe Sycamore is going to have sales in the billions sometime in the next few years, your numbers will be much much higher.
Personally, I am shocked at how bad this report is. Then again, we all knew that Sycamore's sales were far too focused on a few next-gen carriers.
I thought Redback's numbers were bad, but this is far worse. It will be interesting to see how ONI Systems comes out. There may be a reason they have held their valuation while others have crumbled. The Qwest press release today was pretty nice.
Sycamore is a great company, though, and it is hard to imagine them not being an attractive acquisition at these prices. Even though Cisco is only worth $100B, wouldn't it be worth 2% of Cisco to acquire Sycamore's product line, especially given the recent, predictible demise of Monterey?
Adam |
