PAIR/DECISIONS ON AVIDIA ARE CLOSE AT HAND/BUY (SG Cowen Securities)
May 7, 1999 "Avidia Decisions Close At Hand. Buy Rating Retained With a $20 Target price. We checked with our industry sources yesterday, and we believe that a number of the Avidia, DSLAM trial customers are in the final stages of making their decisions, with announcements likely by early June. Trials are under way at Frontier, Sprint, and MCI. And there are about two dozen RFP's in process. With the pending road shows for DSL equipment plays, we believe that investors may look at PAIR as an inexpensive way of playing DSL and that the stock is likely to move higher.
The market has been recently very receptive to DSL concept stories. We believe PAIR will benefit from this trend as the ADSL story gets delivered to the marketplace. The stock is likely to react favorably to any Avidia wins, the first of which we believe could be announced at Interop and Supercomm."
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SOUNDVIEW FINANCIAL: REITERATES BUY RATING, May 10, 1999
"The stock is climbing in front of likely DSL announcements at InterOp.
Highlights: US West and several other carriers are likel;y to make aggressive DSL announcements at InterOp this week. While PAIR's ADSL prospects are more aimed at competitive carriers (CLEC's), we expect PAIR to continue to bask in the glow of DSL news flow in the coming weeks and months.
We would remind investors that in our last note on PAIR we mentioned the company's involvement with AT&T's DSL trials. The quality of the customer names as trials and eventual contracts are announced is likely to be the most important short-term catalyst for the stock.
Our view of the DSL market mirrors the PC industry: the intellectual property and silicon players are more likely to be the moneymakers than the box vendors. PAIR remains one of four companies (the others being Alcatel, Analog Devices, and Texas Instruments), who have DMT silicon for ADSL applications. PAIR has already scored significant royalties from Conexant from its ADSL intellectual property.
While near-term earnings prospects look stagnant (as has been the case the past year), the company's ADSL prospects continue to brighten. We expect this will result in better news flow in the coming six months on Avidia and Falcon (starting with InterOp this week), which is likely to continue to drive the stock higher."
larry
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