[Details from full Bosworth report:]
Take down the scaffolds, Bosworth won't have to be hung after all. I've just read the full 4-page report and it's actually the most positive endorsement we could have gotten at this stage of the game. I'm smiling for the first time in days! (After earlier wanting to shoot the firm.)
Okay, enough effusion. A few quotes:
* The Standard-Bearer for DMT Amati's implementation of Discrete Multitone technology has been accepted by ANSI. . . as the industry standard for ADSL. . . implementation. While not necessarily the last word on the subject, the ANSI standard places Amati in a strong position to form royalty-collecting alliances with major industry players.
* Impressive Network of Alliances. Chipset agreements with Motorola and Texas Instruments, and development agreements with Japan's NEC Corp., increase the likelihood that Amati will capitalize on ADSL if introduction of the technology picks up steam in the late 1990s. When combined with significant potential opportunities at carriers including GTE Corp and British Telecom, the company has a portfolio of technology futures that could generate revenues and earnings far in excess of our estimates.
* Industry Uncertainties Now Dominate. Before we can recommend purchasing the stocks of Amati or other ADSL vendors, we need more evidence that key technology development and market acceptance milestones have been met. This sort of progress, in turn, should yield earnings estimates and price targets in which we can place enough confidence to justify Buy recommendations. Venture investors who want to participate in ADSL despite the uncertainties involved would be well advised to put Amati at or near the top of their watch list.
SUMMARY AND RECOMMENDATION
Amati Communications Corp. has a legitimate claim to a position as the standard-bearer of the ADSL industry, given that its DMT. . . technology forms the basis of the only ADSL protocol yet approved by the American National Standards Institute. Amati has leveraged its technology to form relationships with major chipset vendors and system integrators, making the company a major potential beneficiary of a move to ADSL by telco carriers. Our Hold recommendation is based on our view that ADSL technology is not yet mature enough for commercialization. Those with more confidence in this industry's growth are advised to give close consideration to Amati. |
