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Technology Stocks : Advanced Fibre (AFCI) ** IPO
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To: Douglas V. Fant who wrote (1571)1/13/1999 9:54:00 AM
From: Bill McCullen  Read Replies (2) of 3299
 
For everyone who believes that AFCI is a takeover candidate I am interested in your opinion as to who might be a likely buyer for the company.

LU was a pipedream - they already have multiple overlapping products (SLC-2000, AnyMedia Access System, OEM with Westell).

Nortel is reorganizing (again) and also has product overlap.

TLAB would seem likely on paper but they have been reducing their stake in AFCI for some time now.

Who else?

The DLC business is low margin (therefore may not interest a CSCO which is used to very high margin businesses) and very competitive. I believe AFCI GM is in the 45% range and DSC (now Alcatel), the market leader, was lower than that.

Also remember that there are close to 50 (YES 50!!) companies working on xDSL broadband access systems so AFCI is far from alone on this front. The xDSL/DSLAM business will be extremely low margin and much tougher than even the DLC business.

Maybe Siemens or Fujitsu will ride in and save the day but I doubt it. Therefore, I wouldn't be a holder of AFCI expecting a takeover any day - you better believe that the company can compete on their own.

They own the independent telephone company market so there's not much left to capture there. They need to land an RBOC or make inroads with the CLECs (which they seem to be doing lately - a very good sign). Of course there are risks in dealing with cash strapped CLECs. The remainder of their business is international which still has a large cloud over it due to economic uncertainty.

Good luck,

Bill
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