From Briefing.com "Stock Brief" today:
XYLAN (XLYN)
Another company clearly dominated by engineers, as the presentation focused entirely on how much faster all of their switches
are, and how they all work together. (Reminds us of the old Digital argument why you should buy a VAX.) They see
themselves as tech leaders, and even stated "We do what CISCO and Bay Networks can't."
But people don't always buy the best. The company even admitted this. When asked about future growth rates, VP Doug Hill
stated "If we had Bay Network's sales staff, we could do a lot better." Alcatel is currently a big customer, but their recent
purchase of Packet Engines will probably finish that. Xylan expects no immediate drop off in revenues due to the Alcatel
purchase, but did state that three years from now, they expect zero revenue from Alcatel.
Most telling of all in this presentation was something we noticed in the back row. One analyst, instead of taking notes from the
presentation, wrote the following to his colleague. "FORE, CMTO, CIEN, XYLN: 3 of 4 gone by Q499." His buddy reached
over and wrote under it. "BUYERS: Ericsson, Lucent, Cisco, Alcatel." That pretty much sums it up. The telecommunications
industry small guys simply won't last independently as this industry matures.
XLYN Chart 18 7/8 +1 5/8 |
