Aware Inc. Jumps 16%; Analysts Cite Optimism About ADSL
By Dinah Wisenberg Brin, Staff Reporter
PHILADELPHIA -(Dow Jones)- Shares of Aware Inc. climbed 16% and set a
52-week high Friday, movement the company and analysts attributed to
general optimism about ADSL, a high-speed Internet access technology in
which the company specializes.
The Bedford, Mass., company had no specific news to drive the shares
Friday, President and Chief Executive Michael Tzannes told Dow Jones.
"There's just a lot of general momentum right now behind ADSL,"
Tzannes said, referring to asynchronous digital subscriber line
technology, which moves voice and high-speed data over phone lines.
Some other DSL stocks put in lackluster performances, but Tzannes
said it's difficult to compare directly because Aware focuses purely on
intellectual property, while other companies also manufacture the
equipment.
Aware shares (AWRE) closed Friday at $22.563, up $3.063 on volume of
1.3 million, nearly three times the 458,800 daily average. Earlier, the
shares reached $22.75; the previous 52-week high was $21.688, set on
Nov. 27, and the stock has soared since its low of $4.25 set on Sept.
11.
Shares have been rising since Oct. 22, when the International
Telecommunications Union adopted an ADSL technology standard for
residential data service, G.Lite, that is driven by Aware intellectual
property.
"I think what you have is a continuing phenomenon of investors making
a decision that ADSL is real, and then asking themselves how do they
play it, and then looking at Aware as one of the most viable vehicles in
which to play ADSL," Stephens Inc. telecommunications analyst Charles W.
Pluckhahn said.
On Monday, Pluckhahn raised his one-year price target for Aware to
$32 from $18.
Ever since the telecommunications union announcement, Stephens Inc.'s
Pluckhahn said, several development milestones have been met, including
Compaq Computer Corp.'s (CPQ) decision to install ADSL modems in its
personal computers.
SBC Communications Inc. (SBC), the parent of Southwestern Bell, has
said it will offer ADSL phone service to customers in some areas.
And on Thursday, Dell Computer Corp. (DELL) and 3Com Corp. (COMS)
announced plans to deliver high-speed modems to match SBC
Communication's ADSL service. That may or may not directly affect Aware,
Pluckhahn said, but "I think people are probably connecting some dots.
"I suspect that might be a part of it," he said, referring to Friday's
price rise.
Analyst Michael Neiberg of ING Baring Furman Selz Inc. said that over
the last couple of weeks, "the assumption of just about every conference
call you hear" is that the companies are more optimistic about the
ability to sell ADSL to the phone companies in 1999.
Investors like Aware's business model - unique in the ADSL market -
in which it receives licensing fees from chipmakers that use its
technology, Neiberg said. That protects it from vulnerability to price
cuts, he said.
Pluckhahn said Aware has a better chance of making money and
generating growth in the near term than two other Internet pure plays,
Orkit Communications Ltd. (ORCTF) and Westell Technologies Inc. (WSTL),
because those companies also face the more competitive ADSL equipment
market. Westell closed at $5.313, down 5.6%, on Friday, while Orkit
ended at $15.063, up 2.6%.
"They're the only pure play intellectual property vendor out there,"
he said of Aware. "It doesn't mean that everybody uses them ... but they
have a very good position in the market."
-By Dinah Wisenberg Brin; 215-656-8285
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