from Dain Rauscher Wessels report on 9/21/01.
We are lowering our estimates for September and December 2001 primarily to reflect lower revenue estimates from Qwest:
We still expect Qwest to contribute $110 million in revenues (placed in a purchase order in April 2001). However, we expect a majority of
those revenues to come in 2002 rather than 2001.
We now expect initial revenues from Corvis to be recognized in the December quarter, rather than the September quarter. This is not a
reflection of Corvis’ products, but a mere push-put by one quarter of testing and deployment. We believe that Qwest will contribute
approximately $20-$30 million in revenues in the December quarter.
We are also reducing our expected contribution from Williams (NYSE: WCG; N)and Broadwing (NYSE: BRW; SB-Agg; $15.46) for the
remaining of 2001 and 2002. Williams recently cut its CapEx budget by more than $1 billion for the next 18 months (by approximately
one-third of the total) and we expected Broadwing will spend approximately $50 million all of next year on DWDM gear compared to more
than $250 million that the carrier spent during the past 12 months (through June 2001).
We expect Corvis’ new customers, France Telecom and Telefonica, to contribute revenues primarily in 2002.
We believe that Corvis is actively working on new customer wins and may post a new customer in the coming weeks, but the probability of
signing large deals is diminishing given the fact that many large and important carriers are reducing their CapEx budgets for 2002.
Our new estimates are revenues of $25 million and $35 million for September and December 2001 down from our previous estimates of $65
million and $78 million. For 2001 we are now expecting revenues of $209 million from $292 million initially. Our new loss per share goes
to ($0.40) from ($0.35) previously. We are initiating 2002 revenue and EPS estimates of $200 million and ($0.31), respectively.
Stock Opinion:
We still expect Corvis to exit the year with approximately $600 million in cash, giving it a very strong balance sheet. Based on the current stock
price of $1.79, we expect limited downside (with the current cash position of $2.20 per share). However, given the fact that Corvis will probably
find it difficult to sign up large customers in 2002, and the fact that we are expecting flat year-over-year revenues, we are reducing our rating to
Buy-Aggressive from Strong Buy-Aggressive. Our new price target is $4, based on 6 times 2002 revenue estimates, in line with historical
networking valuations
taken fron yahoo board |
