BAY Ntwks (under House) Message Board

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Technology Stocks : BAY Ntwks (under House)

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To: Beachbumm who wrote (5059)	4/3/1998 12:56:00 PM
From: bayhead	of 6980

Here's the latest update from RS...While they expect Bay to miss the lowered numbers in Q3, whether the stock goes up or down will depend on how the company changes the Q4 expectations..BAY has already said Q4 will be meaningfully higher than Q2....(i.e. $650-675)..if they show too little in Q3 the ability to get to those numbers will be in doubt... 09:31am EST 3-Apr-98 BancAmerica ROBERTSON STEPHENS (Johnson, Paul 212-407-04 MARCH QUARTER EARNINGS PREVIEW (Page 1 of 2) [FirstCall Notes 04/03] April 3, 1998 N E T W O R K I N G I N D U S T R Y MARCH QUARTER EARNINGS PREVIEW Paul Johnson, CFA (212) 407-0415 paul_johnson@rsco.com Ara Mizrakjian (212) 407-0406 ara_mizrakjian@rsco.com Bay Networks (BAY, $26, Buy) Release Date: April 16, after market close Estimates Consensus* BARS Surprise Last Qtr. Revenues (mm) $570-590 $684.0 Pre-released $644.9 EPS (fully taxed) $0.12 $0.29 $0.27 * 26 estimates ranging from $0.05-$0.32 Citing weaker-than-expected demand across all its traditional product lines, Bay Networks pre-released its expectations for the March quarter. Management expects revenues to be roughly 10% lower than the December quarter level due to product transitions and pricing of low-end switching (the BARS estimates in the table above reflect our original estimates). However, the company may come in as much as $10-20 million below that estimate. We expect most of the shortfall to be from lower-than-expected units of shared media equipment and the aggressive pricing environment in the low-end switching market. Despite the shortfall, Bay's management was upbeat about demand for the company's high-end Accelar switching products and the follow-on sales they are generating as well as its plans for new product introductions and continued aggressive expense controls. Visibility into the June and September quarters appears to be good, and we would expect management to be upbeat on the call.

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