<<the critical question for us PAIR holders is who's going to buy PAIR's product?>> Here's more from Volpe Brown's report (reiterate BUY based on ADSL Momentum 1/19/99) which does an adequate job of answering the above.
There have been a number of significant announcements by major communications carriers and other players focused on the deployment of ADSL technology. Most notably last week, there was a major ADSL deployment announced by SBC Communications as well as an alliance between Bell Atlantic and AOL. We believe these announcements, in addition to major deployments announced by Sprint, MCI Worldcom and Bell Atlantic over the past few months, are indicative of broader intentions on the part of incumbent and competitive carriers to aggressively deploy DSL services in 1999.
We continue to believe that Pairgain is very well positioned to capitalize on the deployment, with what remains in our view the "best in class" systems product in the industry. Leveraging the company's core xDSL technology expertise, the Avidia platform offers advantages in terms of port density, power consumption and footprint as well as strong ATM networking and management capabilities. Pairgain also offers a full line of CPE equipment based on its core technology and has licensed its ADSL technology to Conexant for consumer modems. The product is in trial with major independent telcos such as Sprint and Frontier as well as a number of CLECs.
We expect to hear more details about initial deployments of Avidia in the first quarter, with initial shipments for revenue expected this quarter as well. We continue to believe revenue expectations of $20 million for Avidia this year are on the conservative side. We note that the upcoming ComNet trade show (Jan 25 - 28) may serve as a platform for further news on the Company's progress in this market. ComNet will also be one of the first opportunities for investors to hear from new Pairgain CEO Michael Pascoe, who will be hosting a lunch along with other members of the Company's senior management team.
.....Goes on to discuss that Pairgain's HDSL business may finally have hit bottom, and that the ADSL technology and system activities remain substantially undervalued by the market (vs. Aware, & TI's Amati unit). (BTW, Volpe's estimate for the Dec. Q is .07, and .40for CY1999)
Another report from Warburg Dillon Read (Jan. 4 1999) states the following: (in an otherwise very cautionary report).
One new area of opportunity for Pairgain for Avidia in 1999 is the Sprint ION network. Sprint recently announced it would deploy its own xDSL DSLAM equipment rather than rely on ILEC DSLAM equipment for its ION network. Pairgain has a great relationship with Sprint as it already sells both its HiGain HDSL equipment and its PG-Flex DLC product line. The strong relationship with Sprint and the lack of a chosen ADSL vendor at Sprint could provide PairGain a major new opportunity in 1999. (WDR has the Q4 '98 @ .07 and '99 @ .40).
And last but not least, Cowen (from a 12/28 buy report 18 pgs!)states that "SBC, who has been a large (we estimate about $30MM in HiGain business annually) and faithful PAIR customer to date is likely to award a large HDSL contract early in C99. We believe PAIR is well positioned to continue to supply SBC. (Cowen has the #'s @ .07 & .37 respectively, as well as .53 for '00...43% growth!)
One of these contract announcements and PAIR is off to the races. (that's me talking)<g>
Larry |
