Janice more from Oppenheimer & Co., Inc.,
"INVESTMENT CONCLUSION: In what was clearly the company's most challenging
quarter in recent memory, USRobotics came through with excellent 1Q results
that were right in line with our forecast and easily ahead of the pessimism
that had been putting pressure on the stock in recent weeks. We believe
these results are further proof of USRobotics' worldwide leadership position
in the remote access market and set the company up for a tremendous period
of growth ahead. As we have discussed in our research reports over the past
few months, our near-term investment thesis on USRobotics hinges on the
timely delivery and marketing of its X2 56 kpbs technology. The December
quarter's results are critical because the indicate, in our opinion, that
when X2 products and systems do begin shipping, USRobotics' will have built
up a head of steam that could lead to even more profits than we currently
expect. We continue to urge investors to jump on board the USRobotics X2
train before it pulls out of the station.
Why Do We Think The Train Is About To Leave The Station?
The quick answer to this question is that we believe that USRobotics is
within two weeks of its most important set of product rollouts in years and
all indications point to a significant time-to-market advantage over its
competitors. Of course, we are referring to X2 56 kpbs modems and software
for the company's remote access systems. We continue to believe that (1) X2
modems are on schedule for shipment to the distribution channel by the end
of January, (2) they will be priced at a meaningful and profitable premium
to their 33.6 kpbs equivalent modems, (30 major Internet service provider
rollouts of X2 service will begin in February, and (4) USRobotics is at
least three months ahead of its competition in delivering end-to-end 56 kpbs
remote access solutions"
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