Sons valuation, now & 2 yrs - from main board
It goes without saying, but we will not have a sustainable move up
without an increase in RECONIZED rev.
I think its current momemtum will bring us above $5, maybe soon I
don't know. But until we see a REAL uptick in rec rev, or a new
Tier1 customer ... we don't break above $7. Won't happen. As much as
I do hate to admit it ... we (compared to reconized rev) are fairly
valued, or even slightly highly valued at CURRENT price. Look at our
p/s compared to others. We do have some pps premium, even at $4.40
because of our positioning and deffered rev, etc. Look at JDSU for
ex, our p/s is 2x theirs. But JDSU isn't profitable, bad margins,
etc etc. We are the opposite ... and thats why our "fair" value is
$5-$7 and with it a higher valuation than NT, LU, JDSU, etc.
... when it hit $10 Jan 2004 ... its p/s was like 30 ... almost 5x
what our is now. Does that mean b/c we had that valuation that we
should be a $20 TODAY???? It would be nice ... but SONS mgmt has
kept itself from having a high valuation of that magnatude.
BUT ... there is a GOOD chance we could see reconized rev in 2 yrs
be 3-4x what it is now. And with it, our valuation grow a little
higher ... which would give $20-$25 in 2 yrs.
To get that pps, the first wildcard is of course for Sonus to
execute and all the deffered and "can't talk about" rev catching
up ... which I think it will. IMHO in 2 yrs 3-4x reconized rev from
today isn't anything which is unreasonable.
But from there ... the next wildcards are whether SONS is looking to
be THE or at least on of the top 2 to dominate the market. If so ...
then thats when of course rev/earings will increase in
corelation ... but people start to see SONS as a unique opportunity
and it starts getting assigned a higher valuation that it should
have. That is what is happening with XSMR and SIRI. They can have
100 p/s when a stock like SONS has 6 p/s ... because they are seen
as unique opportunities.
And when that happens ... then what will the price be? In 3-4
yrs ... could it be $50 ... $100???? If we had SIRI's valuation ...
we would be over $50 TODAY. And if things do play out that way, and
SONS' valuation starts to really run away from it, and SONS is
a "hot stock" ... then it will be a game of playing the market ...
and guessing when the market had enough and is ready to go to the
next hot thing.
... and these are best case scenerios by the way. Eventhough I do
plan on holding probaly 1/3 of my current shares till 4 yrs from
now ... I am not "looking" for it to be $50-$100. But it is a
possibility nonetheless.
Its also a possibility that in 4 yrs we are $20-$25. That has
probably more of a chance of happening as the other scenerio. Look
at JNPR ... went from $4 to $30 in little over a yr ... but then for
the past 1-1/2 yrs its been between $20-$30. We could follow that
same pattern. And honestly eventhough I sold out of my JNPR last yr
at around $25(bought at $8.36) that is one reason I am watching JNPR
over the next few yrs, I am curious to see how it does as a
precedent of sorts to SONS.
But either way ... I think there is a 75% chance we see at least $25
within 2-3 yrs ... 10% chance we are $5 in 2-3 yrs ... and 10% we
are $10-$20. With 5% being things fall apart and we are below $5 in
2-3 yrs.
And then if we see above $25 ... I think there is a 25% chance we
see above $50 ... with the other 75% being we don't go over $40.
And that is just my WAG from looking at other companies in the past,
talking to others who have had the Dells, the Microsofts, Yahoo, etc
in the past, and characteristic they had then, looking at what SONS
could be in the VOIP market, etc. etc. ... and making a GUESS. My
guess is as good or bad as anybody elses. But If I look at the same
things with a number of other stocks .... I am not even confident
about other stocks even being higher in 2-3 yrs than they are
today ... so that is why I am invested in SONS. Maybe its a "story
stock" ... but I like the story. And I'll take the potential over a
safe stock right now .... and with SONS the potential is there,
nobody can deny that. Whether mgmt executes or not is then going to
be the difference between it being a story, or future reality ;)
- from yhoo msg#440595,6
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