There has been quite a lot of talk lately that a westell buyout is imminent. I don't believe we will see a merger or buyout anytime soon for a few reasons:
1.) ADSL deployments have not started, we all know it won't be until late 1999 before anything really gets under way that will have an affect on bottom lines
2.) 'The bronze coin family' as the good doctor describes them would be fools to sell now when westell has the most potential BUT not a lot to bargain with
3.) Westell has enough cash to last 6-12 months without significant revenues, which falls in line with when deployment should be accelerated significantly
Let me put it this way, they have enough cash to last another year, why sell now when there is the DMT BA contract looming, BT, etc...the price they could get now won't be much worse a year from now, the returns by waiting are enormous without much downside. If westell gets a few more contracts, then they have bargaining power if a buyout is considered-or better yet, they exist as autonomous leader in this burgeoning sector.
Here is food for thought: Both at Supercomm and during the CC, it was mentioned that wstl is focusing on ISPs-now AOL is the largest ISP in the US with over 14 million customers-yet that marketshare is going to be quickly eroded when every telco comes in with high speed access (ADSL), ISP (for example USwest.net is free when you sign up for the MegaBit service), and telephone all in one-AOL needs a carrier and it is rumored that it is GTE (CLEC?) If that is the case, wstl could be providing modems for AOL via GTE.
any comments? FWIW jeremic |
