<<IPO Special Report: Copper Mountain Networks IPO Scrapes the Sky
Miami, FL, May 13 /SHfn/ -- Copper Mountain Networks [Nasdaq:CMTN] had a spectacular debut on Wall Street.
Shares closed at 68-7/16 representing a 226% premium over the higher than expected $21 offer price on 4 million shares.
CMTN is a leading equipment provider to the high-speed DSL-providers.
Copper Mountain Networks received a boosted price range of $16-$18 from $12-$14 before clinching an offering price of
$21 on 4 million shares for a final offering amount of $84 million. Morgan Stanley Dean Witter hopes to add CMTN to its
extensive list of ultra-successful new issues. Under Morgan, CMTN recieves support from BancBoston Robertson Stephens
(famous for deals such as E*Trade, Ebay and Knight/Trimark), and Dain Rauscher Corp.
Copper Mountain Networks is a leading supplier of high-speed DSL-based communications products for the broadband
access market. Essentially, the company provides the means for network service providers to expand into new markets and to
dramatically improve the speed of service. The high-speed connections are achieved with the of Digital Subscriber Line (DSL).
DSL utilizes the existing copper wire telephone infrastructure to deliver data access rapidly into business, multi-tenant unit and
residential markets. The company believes that DSL offers competitive advantages over its broadband rivals, such as T-1,
integrated services digital network (ISDN), coaxial cable and wireless.
Copper Mountain believes that DSL has cost, performance and coverage advantages over the other alternatives to broadband
connectivity. With DSL cost is an advantage because the telecommunications providers may use the copper wire infrastructure
that already connects to most businesses and homes across the U.S. CMTN offers scalable solutions for DSL through
products such as the CopperEdge DSL Access Concentrators, CopperRocket DSL CPE and CopperView Network
Management Tools. The company believes that these products offer proprietary features, reliabilty and ease of use. And in
addition, Copper Mountain states that its technical support, customer service, and size give it a competitive edge.
However, it may be difficult to ascertain exactly what is meant by a competitive edge and even more difficult to determine the
sustainability of any such advantage. The rapid evolution of the telecommunications industry and the dynamic developments
among telecom equipment providers create both the largest threat to this company's success and the largest opportunity for its
growth. There is no question that the need for improved Internet connectivity is paramount to the progression of a world
economy heavily dependent on e-commerce. And with DSL offering data transfer rates at speeds that are approximately 125
times faster than the fastest dial up modem, and 44 times the speed of ISDN lines, it would seem on the surface, that the
technology is sure to ignite. Remember however, that the share price hinges precariously on the acceptance of DSL over
emerging developments such as the latest rift of products in wireless. Formidable competitors exist within the DSL space
including Cisco Systems, Ascend Communications (Lucent acquired), and Diamond Lane Communications (acquired by
Nokia). It is not a far reach to imagine that an established leader in DSL equipment products could be an acquisition target by a
service provider or larger competitor. It is interesting to note that one of the key directors for this company is a director of
Ascend Communications and holds a 16.6% stake in the company, pre-offering.
As may be expected, this is another growth company that has never seen its way out of the red, and has an admittedly short
operating history. However the $6.5 million loss in FY 1998 could be overlooked in light of the fantastic growth potential within
this industry. And who could be unimpressed by a 10,241% growth in revenues over the previous year. In a mere 12 months
the company moved from $211 thousand to $21.8 million in sales. Products are distributed through a direct sales force and
selected OEMs and distributors to customers such as NorthPoint comunications, Rhythms NetConnections, ICG
Communications, and UUNET, a subsidiary of MCI WorldCom Inc. Copper Mountain has also formed key strategic
relationships with Lucent Technologies and 3Com Corp.
And while it is true that this firm relies upon a small number of customers, the strength of management will likely facilitate the
entrance into new agreements as more and more companies look to join the race to roll out DSL. Management boasts broad
expertise in telecommunications, networking, wireless. and Internet software gained from companies such as ADC
Telecommunications, AT&T Bell Laboratories, Paradyne, Cisco, and Intel.
In short, Copper Mountain is witnessing the demand for faster connectivity grow exponentially in tandem with the burgeoning of
the Internet as a marketplace. And it is this reporter's opinion that Copper Mountain has a pulse on this red-hot market. >>
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Scrapps: Too bad I wasn't on board for the CMTN IPO ride -- it was a barn burner. Do you have shares in this firm? DSL is hotter than ever. The last 3 paragraphs of this update contained the following passage that caught my attention... "Copper Mountain has also formed key strategic relationships with Lucent and 3Com." Hmmm.....IMO, that means there could be a good chance this new firm will be using AWRE technology. What do you think? Maybe I'm just dreaming....But then again, maybe I'm not !!
Best Regards,
Scott |
