pair overvalued? that's a good one
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Internet Stock News Announces Investment Opinion: Are Digital Subscriber Line Providers Overvalued?
Business Wire - June 03, 1999 05:15
SAN DIEGO--(BUSINESS WIRE)--June 3, 1999--
Are Digital Subscriber Line (DSL) Providers, Such As Pairgain, Copper Mountain, Rhythms Networks, and mPhase Technologies, Overvalued?
That is the question that top Internet stock analysts from well-known investment banking and media firms such as BancBoston Robertson Stephens, Lehman Brothers, Internet Stock News (http://www.internetstocknews.com), and Goldman Sachs have had to ponder over the recent volatile months in the U.S. stock markets.
Leading Internet Service Providers (ISPs), such as AOL, Earthlink, and Mindspring, have dominated U.S. markets with their large number subscribers, becoming some of the most highly-valued stocks traded today. Nevertheless, despite their unprecedented run-up in share price as well as their impressive revenue growth, these companies, which provide dial-up access to the Internet at speeds as high as 56K baud rate, are struggling to meet the growing demand of faster, high-speed Internet connections through broadband technology.
In attempts to provide a solution for high-speed Internet access, two major types of broadband technologies have emerged: Digital Subscriber Line (DSL) providers and cable modem providers. DSL technology is able to increase the data-carrying capacity and transmission speed over conventional copper wires. In contrast, cable modem providers are able to provide high-speed Internet access over a coaxial television cable.
Key players providing DSL technology include PairGain Technologies (Nasdaq:PAIR), Copper Mountain (Nasdaq:CMTN), Covad Communications (Nasdaq:COVD), Westell Technologies (Nasdaq:WSTL), Rhythms NetConnections Inc. (Nasdaq:RTHM), Flashcom Inc., Orckit (Nasdaq:ORCT), and mPhase Technologies (OTCBB:XDSL). The two major companies providing cable modem service are @Home, and RoadRunner, owned by Time Warner Communications (NYSE:TWX).
The key differences in these two types of broadband technologies mainly consist of how each can be implemented into the existing users' homes. Currently, only approximately 25% of all cable subscribers are currently outfitted to receive cable modem technology, and it may take up to two years to get all of the existing cable infrastructure updated for cable modem access. In contrast, DSL providers are able to offer their high-speed Internet access through existing phone lines, thus being currently available to every Internet user.
Despite these key fundamental differences, the cable modem providers, @Home and Roadrunner, have received considerable media attention. As a result, @Home (Nasdaq:ATHM), which is already up about 70% year-to-date, is being labeled by many Internet analysts as grossly overvalued.
On the other hand, DSL providers, which have been largely overlooked by a majority of Internet analysts, are continuing to enjoy equivalent rates of revenue growth as their cable modem counterparts. As a result, the majority of DSL companies have remained attractively valued, as compared to other Internet-related companies, including @Home. Furthermore, as demand continues to grow for high-speed Internet access, DSL providers are able to rapidly implement their services, especially in areas where the cable infrastructure has yet to be updated.
For example, mPhase Technologies' unique, digital television data delivery system (DTVDDS) broadband Traverser system provides users with high-speed Internet access, digital television, and telephone capability -- all of which can be performed simultaneously over existing telephone lines. mPhase believes that this versatile technology, which has already generated much interest and praise in the Internet community, is superior to the broadband access provided by other vehicles, such as cable modems.
So then, based on this information, are Digital Subscriber Line (DSL) Providers, such as TUT Systems (Nasdaq:TUTS), Pairgain, Copper Mountain, Rhythms Networks, and mPhase Technologies, overvalued?
According to Chirag Amin, M.D., an experienced media editor and stock analyst at Internet Stock News (http://www.internetstocknews.com), the answer is an emphatic "no".
"Companies such as PairGain (Nasdaq:PAIR) and mPhase (OTCBB:XDSL), can generate enormous revenues by attracting a large number of Internet users as well as businesses all over the U.S. "It comes as an extreme disappointment that cable modem access is not currently available in my area. Fortunately, for myself and many others, DSL technology has proven to be an effective solution for high-speed Internet access," stated Dr. Amin.
"The current revenue growth of many DSL providers is simply astonishing, especially in light of their current stock prices. As the demand for high-speed Internet access continues to grow at a rapid pace, especially in areas that are currently not served by the existing cable infrastructure, many of the larger Telcos and Internet Service Providers (ISPs) will look to these DSL providers as an extremely viable and easily-implemented broadband solution," added Dr. Amin.
While no one is able to accurately predict the future growth prospects of such companies, investors and media representatives have shed much attention on recent Initial Public Offerings of these Digital Subscriber Line (DSL) Providers, such as Copper Mountain (Nasdaq:CMTN) and Rhythms NetConnections Inc. (Nasdaq:RTHM).
Do these Internet companies know something that people on Wall Street are overlooking? Will the proverbial "Internet bubble" burst, or will these DSL providers, eventually grow to become more powerful than today's major cable modem and dial-up Internet Service Providers (ISPs)?
About Internet Stock News:
Internet Stock News (ISN) is one of the most well-known and widely read free Internet investment publications with over 75,000 readers worldwide. ISN provides items such as Free Real Time Quotes, Independent Analysis & Commentary about Internet Stocks, and Access to Internet Initial Public Offerings at internetstocknews.com. Internet Stock News is published by IP Equity Inc., an Internet-targeted investment firm. IP Equity Inc. has been compensated with cash, stock, and options of Information-Highway.com Inc. totaling less than three hundred four thousand dollars at the time of engagement for investor communications services. Please read the disclaimer at internetstocknews.com for additional information about Internet Stock News.
CONTACT: IP Equity Internet Investments
Dan Mutters, 800/997-3323
Dan@ipequity.com
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