New KBRO Research for NTPA
WESTELL TECHNOLOGIES, INC. (WSTL _ $2.00)
Rating: HOLD
COPPER MOUNTAIN NETWORKS, INC. (CMTN _ $2.93) David Miller, CFA,
Rating: ACCUMULATE
Price Target: $7
NETOPIA, INC. (NTPA _ $3.61)
Rating: BUY
Price Target: $10
Clifton L Gray, 212.292.8141
cgray@kbro.com
OH WHERE, OH WHERE HAS MY DSL GONE–TO THE ILECS
We are releasing our new DSL subscriber estimates reflecting results from the March quarter and our new forecast for growth in both North American and international markets. We continue to believe that the most important developments in deployments of DSL technologies have to do with the impressive rollouts of service in international markets and not the disappearance of competitive carriers in North America.
For the North American market we now forecast roughly 5.7 million DSL subscribers at the end of 2001 and 9.0 million at the end of 2002. There were roughly 3.2 million subscribers at the end of the March quarter, up from 2.5 million at the end of last year.
For international markets we now project about 9.2 million subscribers by the end of the current year and over 19 million subscribers by the end of 2002. At the end of the March period there were almost 4.5 million subscribers, up from 3.2 million at the end of last year.
We continue to believe that deployments in North America should be back-end loaded as incumbent carriers focus on deploying long distance services. While recent price increases for DSL service indicates plenty of demand for high-speed services, it should also deflect more price sensitive consumers to competing technologies.
In international markets, however, we continue to be impressed with progress at large operators such as Deutsche Telekom (DT $24.37) and France Telecom (FTE $66.01) and deployment plans at Nippon Telegraph (NTT $37.29).
On the equipment side, we believe these deployments benefit most many of the large equipment houses, in particular, Siemens (SI, $76), Alcatel (ALA $33.58), and Lucent Technologies (LU $10.46).
From the perspective of the smaller DSL companies, we believe the aggressiveness of France Telecom™s Wanadoo™s service should translate into business class deployments this year; Netopia has already shipped G.SHDSL product into this account through its larger partner, Ericsson (ERICY $6.44) and will likely see additional and growing revenues from this channel in coming quarters.
An ActionAlert with the breakout of our estimates will follow. |
