Extreme Networks, Inc. (EXTR) Message Board

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Technology Stocks : Extreme Networks, Inc. (EXTR)

EXTR 17.65

-0.9%

Nov 5 3:59 PM EST

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To: StormRider who wrote (623)	8/20/2001 5:12:00 PM
From: kendall harmon	Read Replies (1) of 770

EXTR, interesting comments here from Dow Jones on the ETS downgrade today <<Enterasys Networks Inc. (ETS) shares dropped 29% Monday and hit a 52-week low following a Morgan Stanley Dean Witter downgrade of the company's stock Monday to neutral from outperform. Pacific Growth Equities analyst Erik Suppiger attributed the drop to the Morgan Stanley downgrade. He noted that the Morgan Stanley report expressed concerns about Enterasys shipping more products into its "channels" - distributors such as value-added resellers and integrators - than those channels were selling to their customers. The Morgan Stanley report Monday came less than a week after Morgan Stanley initiated coverage of Enterasys with an outperform rating. The firm initiated coverage of the company on Wednesday. Analysts at Morgan Stanley could not be reached for comment.... Suppiger said he spoke with Enterasys management Monday morning and "they said this is what they typically do (on supplying distributors)." The company has been expanding its distributor relationships, so there is a little more inflow to the distributors than outflow, but those changes "have not been significant." "We haven't seen anything to suggest that their channel inventories are excessive," said Suppiger. The Morgan Stanley report also said that industry analysts' forecasts for Layer 3 switching "are too aggressive, based on assumptions of modest price declines." Layer 3 switches make up about 75% of Enterasys' business and are used for data communication in local area networks and metro networks. Suppiger said he hasn't seen anything to suggest more aggressive actions forcing down pricing on Layer 3 switches. Suppiger said he is reiterating his strong buy rating on the stock and his $20 price target, and he considers the share price decline Monday a "buying opportunity."

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