AWRE up huge today:
Forbes:
By Charles Dubow
Wouldn't it be nice if you could get blazing
fast Internet access using your plain old
telephone system? Didn't think that the
Baby Bells had it in them to let you
watch a music video on your computer
screen or conduct an interactive voice chat
with a friend in Tokyo? Well, think again. It is
going to happen, thanks largely to an
underappreciated, but increasingly talked
about, technology known as digital subscriber
line (DSL).
One of the companies that is making this
happen is Aware Inc. (AWRE), a 77-person
outfit based in Bedford, Mass. The company,
which has been developing DSL technology
over existing telephone wires since 1993, has
been on a roll lately.
Last week the company announced a
strategic alliance with Siemens' Information
and Communications Networks group, a
division of Siemens AG, to develop the first
integrated communications platform to
incorporate DSL and voice onto a splitterless
interface. "This is a pretty nifty
announcement," says Paul Johnson, senior
technology analyst at BancBoston Robertson
Stephens. "Siemens is one of the most
important providers of end-to-end solutions
for voice, data and mobile communications in
the world and for them to choose Aware as a
critical partner is very significant."
On Jan. 26, Aware announced record
revenues of $4 million for the fourth quarter
of 1998, an increase of 123% from the same
quarter in 1997. Net income was $575,000, or
3 cents per diluted share, beating Wall
Street's estimates. Revenue for the year
increased 90% to $11.8 million, compared
with $6.2 million in 1997. "I was forecasting
revenues of $3.7 million," said Robertson
Stephens' Johnson. "It was a clear upside
surprise." The numbers are still small, but the
potential that lies ahead is what counts.
It's easy to understand why
DSL is called "copper wire
on steroids."
Aware's results come without a large-scale
DSL deployment anywhere in North America.
If this good news was not enough, last week
the Federal Communications Commission's
announcement rejecting Internet service
providers' demand for equal access to
high-speed cable lines was bad news for
companies like America Online (AOL) and
MindSpring Enterprises Inc. (MSPG).
With the cable providers effectively cutting
themselves off, this means that ISPs like
AOL, which recently inked a deal with Bell
Atlantic (BEL), will have to rely solely on DSL
to bring high-speed Internet access to the
market.
Aware has a simple business model: It
develops its technology for other companies
in exchange for licensing and royalty fees,
which in the fourth quarter made up more
than 75% of its revenues. Since last October,
Aware's stock has surged from 4.25 to a
recent high of 44.50, primarily on the news
that the International Telecommunications
Union (ITU) had designated Aware's DSL Lite,
or G.Lite, technology the DSL standard.
Aware, in turn, has licensed its G.Lite
software to companies like Lucent (LU),
which then sells it to computer maker
Compaq (CPQ), Analog Devices Inc. (ADI),
Siemens and 3Com (COMS).
As more semiconductor companies and PC
makers adopt the G.Lite standard, Aware's
licensing and royalty revenues will only
continue to increase. "While other companies
such as Orckit, PairGain (PAIR), Alcatel (ALA),
and Texas Instruments (TI) are developing
DSL technology as well, Aware has the
advantage," says Shannon Pleasant, an
analyst at Cahners In-Stat in Scottsdale,
Ariz. "They have years of engineering and
research technology the others don't have.
Chip vendors don't have it either and they
can't wait three years to catch up. That's
why they need Aware."
The beauty of DSL technology is that it
allows the phone companies to provide
high-speed connections over their existing
networks. Currently, there are millions of
miles of copper wire buried underground,
which handle the bulk of the nation's
telephony. To rip these up and replace them
with fiber-optic cable would be prohibitively
expensive. But DSL essentially upgrades only
the ends of the copper wire, the one end in
the phone company's central office and the
other in the end user's modem--with no
rewiring needed. The existing cooper wire is
left in place but the new DSL connection is
exponentially faster than today's 56 kbps
modems.
DSL technology does not change data into
analog form and back, it transmits directly
into your computer as digital data, allowing
the phone companies to use a wider
bandwidth. The modem in your computer
demodulates the analog signal and transforms
it into digital data. The signal can also be
separated, "splittered," so that the consumer
can use both their telephone and computer
on the same line at the same time. It's easy
to understand why DSL is called "copper wire
on steroids."
It's just a matter of time for the other companies; WSTL, PAIR, ORCTF. DSL is about to explode. Who was it that talked about AWRE though over all the others???????? I think second tier will have its day as well. Momentum will come. |
