To All:
Since we are just sitting here waiting for
PAIR to pop, I thought I would share
some excerpts from a Feb 27th S&P report
on Pairgain...
PairGain Technologies
Nasdaq Symbol PAIR
STOCK REPORTS
Overview - 05-FEB-99
PairGain has benefited from strong demand from
end-users for higher bandwidth services for applications
such as Internet access and telecommuting. New products and technologies, such as the PG-Flex and Asymmetric Digital Subscriber Line (ADSL), should help PAIR to capitalize on the increasing demand telephone companies are experiencing for additional access lines in residences and small businesses. Although unit shipments
have been strong, pricing pressure has negatively impacted both sales and gross margins. We now expect sales to fall modestly in 1999, as the positive impact of new products will be offset by continuing pricing pressure and the loss of a major customer. Operating expenses are also likely to be higher as a percentage of sales. Our EPS estimate for 1999 is $0.40, a 27% decline over operating earnings in 1998.
Valuation - 05-FEB-99
The shares have performed well thus far in 1999, as fourth quarter earnings were in line with previously lowered expectations. Investors' remain hopeful that new products will help to boost the company's future prospects. In particular, PAIR's new Avidia System, currently in customer trials, could have a large impact in 1999. Avidia allows service providers to deploy multiple ATM and IP-based services from a single platform. However, PAIR's core High-Bit Rate Digital Subscriber Line (HDSL) business continues to experience substantial
pricing pressure. PAIR has nearly $3 a share in cash
and investments, and the company will likely use this
cash to either acquire a complementary company or
continue to buyback its own shares. In the fourth quarter,
PAIR repurchased one million of outstanding common shares. With earnings expected to fall in 1999, we continue to view the shares as fairly valued. No cash dividends have been paid.
This report is for information purposes and should not be considered a solicitation to buy or sell any
security. |
