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Strategies & Market Trends : Pump's daily trading recs, emphasis on short selling

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To: Michail Shadkin who started this subject	7/17/2001 12:29:27 PM
From: Michail Shadkin	of 6873

CTLM research note from July 10 CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research Americas Internet Software & Services Charlie Glavin 415/836-7715 charlie.glavin@csfb.com Regina Eberhart 415/836-7767 regina.eberhart@csfb.com BUY Target Price: 50.00 (US$) Centillium Communications (CTLM) June Quarter Preview Summary We believe that Centillium will slightly exceed our $41.4 million revenue estimate for 2Q, and believe that both our $163 million revenue model and consensus estimates of $166 million could be nudged up for the year. We believe CTLM continues to benefit from the Japanese ADSL buildout where it currently maintains 95%+ market share. Similar to last quarter, we believe Japanese revenue could make up 85-90% of CTLM's sales this quarter, mostly from NEC, Sumitomo, and Xpeed (a U.S. vendor that sells into the Japanese market). In addition to ICs used on central office line cards and traditional stand-alone modems, CTLM is also selling PCI-based ADSL chips that are going into NEC's PCs that should ramp in high volume during 2H01. We believe CTLM also has a VoP design win with NEC for CTLM's Entropia product-this could also support solid Japanese sales exiting 2001. We also expect CTLM to clarify how Softbank/Yahoo's entrance into the market will not affect Centillium's dominance for Japan's "Annex C" version of DSL. Softbank indicated that it is considering the "Annex A" version of DSL-while this may have driven down CTLM's stock recently, we view this as odd considering Annex A is unable to deal with the crosstalk and interference specific to Japanese copper plant. We estimate that by 4Q at least 5-10% of sales could be generated from the Entropia product (for VoP), but we believe CTLM will keep current 2002 growth projections in the conservative 35-45% range. Price Target Mkt. Value 52-Week 06 Jul 01 (12mo.) Div Yield(%) ($m) Price Range 21.71($) 50.00($) 806.31 107 - 14 Annual Abs. Rel. EBITDA EV/ EPS($) P/E(x) P/E(%) ($m) EBITDA(x) 12/02E 0.47 46.2 12/01E 0.20 108.6 12/00A -0.60 -36.2 Q1 Q2 Q3 Q4 2002E 0.08 0.10 0.13 0.16 2001E 0.01 0.06 0.06 0.07 2000A -0.19 -0.24 -0.11 -0.05 ROIC(12/00A %) Net debt(12/00A $m) NM Net debt/Total cap.(12/00A %) Book value/share(12/00A) 3.05 Number of Shares(m) 37.14 1On 07/06/01 the S&P500 index closed at 1190.59. 2Economic profit trend.

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