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Technology Stocks : ACT NETWORKS
ANET 121.79+3.7%3:04 PM EST
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To: Ken Ridge who wrote (2272)8/16/1998 10:50:00 AM
From: huntin  Read Replies (1) of 2326
 
I do not see cash disappearing. From disgruntled employees posting on the YAHOO board, the cuts are moving quickly. They call this the end of ACT. I understand how the employees feel. I have watched friends down-sized from the defense industry.

In that industry the market for product was decreasing. The telecommunications industry is still growing. ACT has a book to bill of one. The revenue should be close to 13M next quarter with gross margins above 50% as stated in the CC. The SG&A will be considerably lower with these cuts. I do see a loss of 30 to 40 cents, still leaving a bundle of cash. In this market, there is no company out there with this kind of price to cash and receivable ratio.

The R&D spending will decline as well. The new exchange product is in Beta testing. This is a long way down the road from beginning development. My limitations on understanding this company is determining what revenue this new product brings. I would appreciate any understanding of the market you may have.

This restructuring is far from a cash burning activity. It is a cash saving activity. There is two to three million more for restructuring charge. For a company with over $46M of cash and short term investments, I would consider this a small price to pay for saving a company that was bleeding.

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