Sycamore Networks Inc-(SCMR) Message Board

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Technology Stocks : Sycamore Networks Inc-(SCMR)

SCMR 0.226

0.0%

Nov 30 4:00 PM EST

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To: Bill who wrote (2041)	4/13/2001 6:52:49 PM
From: Maverick	of 2249

Epoch recommends aggressive investors to build a position in SCMR epoch.com Quarter Announced Report Date Price 04/04/01 Epoch Estimate Sales (Mil.) IBES Sales Consensus (Mil.) Epoch EPS Forecast First Call EPS Consensus 3Q 2001 5/15-18 7.65 $163.4 $158.0 $0.05 $0.05 Key Metrics or Topics to Consider Epoch Call on Quarter Action Product traction: Look for increased traction of the SN3000 via strength of 8000MC in the metro (3000 margins are unfortunately lower than corporate average). New product: Look for trial shipments of the new and improved SN16000 with 512x512 port density and grooming capability. Lack of port density on the 16000 has hurt Sycamore badly to date, as Ciena gobbles share with its 256x256 Core Director product. Revenue target, mix: Exceeding our revenue target while mitigating revenue concentration from Williams (50% in last quarter) would be a catalyst for upside in the stock. Also continued support of 360networks will be key. Receivables: We hope to see accounts receivable balance worked down and vendor financing used strategically in a weak financing market. Sycamore could meet our downwardly revised estimate, but we're not expecting a blowout quarter based on the change in tone from 360networks and Williams -- each adopting "success-based" cap ex policies. Also, Sycamore's lack of a 512x512 switch is creating a vacuum, which Ciena is happy to fill with its Core Director. On a risk-adjusted basis, if Sycamore executes, we think shares look attractive under $8 for long-term investors who can weather the near-term weakness. A product cycle driven by introduction of its 512x512 switch would mark a major catalyst for the stock. Source: Epoch Partners 360networks' recent cap ex revision and delaying $500 million in payments to its vendor will most likely increase Sycamore's account receivables. With Williams (a 50% customer last quarter) announcing that future cap ex deployment will be success based, Sycamore needs to broaden its customer base quickly. We believe last quarter and recent customers wins, such as Tata Power, will enable Sycamore to meet its quarterly estimates. Introduction of a switch with higher density than Ciena's will be a critical factor in Sycamore's comeback. Bottom Line Sycamore has taken it on the chin by guilt of association with the beleaguered CLECs. Trading as only twice its cash balance, we feel the bad news is priced into the stock. As believers in Sycamore's fundamental value proposition and product portfolio, we would advise aggressive investors to build a position with the idea that SCMR shares offer significant upside in a recovery.

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