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Technology Stocks : Visual Networks (VNWK)

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To: DD™ who started this subject	11/6/2002 8:05:33 PM
From: Byron Angel	of 367

AeA conference presentation A very positive presentation today by Peter Minihane at the AeA conference. He is very comfortable with the Wall Street consensus which calls for another profitable quarter for VNWK in Q4. He expects to have $15-16 million in cash on the balance sheet at the end of Q4. Mr. Minihane pointed out that data traffic continues to grow and this will drive future revenues for VNWK. He mentioned that AT&T voice and data revenue are now roughly equal for the first time ever. VNWK's partner program with Kentrox and Cisco is going well. Their first Cisco product, an ATM product, is now being finalized. Mr. Minihane stated that he is in talks with other hardware companies about partnering with VNWK. I doubt he would have mentioned this unless he was confident of the success of these talks. The sales VNWK makes through its partner program all have very high margins. AT&T and Equant have been selling the IP-VPN version of the Uptime product this year. VNWK is in talks with other major service providers about also selling this product. VNWK has the only performance management product available today for IP-VPN and they are in the process of locking up this market. VNWK continues to spend at a high level on R&D and are maintaining their technology leadership. The Insight product continues to do well and the future looks very good for this product. Mr. Minihane mentioned the recent deals announced with Worldcom and Bellsouth. The most exciting part of the presentation was the financial model near the end of the presentation. According to Mr. Minihane, because of cost cuts that have been made and the operating leverage this company has (which is typical for a software company) they only need a 10% increase in revenue to reach an operating profit margin of 24%, and they believe they can accomplish this during 2003. That level of profit margin would place the company at an annual rate of earnings of around 50 cents per share, which would support a stock price in the $7.50 to $10 range, and that is my target price range for this stock over the next 12 months. It's obvious from today's price and volume action that institutional investors like this opportunity and are moving into the stock in a big way. Byron

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