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Technology Stocks : SONS
SONS 7.830+2.8%Nov 28 4:00 PM EST
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To: ELH1006 who wrote (782)12/1/2006 8:35:30 AM
From: Cooters   of 1575
 
Lehman(Lucent's former whore) upgrades SONS

Investment Conclusion
We intro '08 ests for SONS & raise tgt to $7.50, or
25x our new CY08 EPS of $0.30 (+36% YoY). We
are also outlining key things that may go right &
wrong for SONS in CY07. Over last 12-18 months,
SONS has executed better than we expected and
has successfully managed thru potential negative
impact by advent of IMS. While we clearly
recognize lumpiness in SONS qtrly rev streams,
we continue to believe carrier VoIP a key growth
mkt. W/ more comfort re SONS' comp positioning,
we are raising our rating to 1-OW.
Summary
?? For CY07, things that may go right for SONS incl
1) carriers accelerate deployment of SONS' VOIP
gear - DT, KDDI, Cingular, etc; 2) faster than
expected op margin improvet; 3) potential disruption
in merger integration among competitors
(ALA&LU, NOK/SI) allows SONS to take shr
?? Things that may potentially go wrong for SONS in
CY07 incl 1) delay in rev rec on certain lrg deployments;
2) worse than expected pricing pressure as
lrger competitors may re-focus on this mkt; 3)
carriers more aggressively consolidate vendor lists
?? Our checks suggest n-term biz trends strong and
our ests for Q4 and beyond potentially conservative.
Options probe overhang likely lifted soon.
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