Orckit in SmartMoney article
smartmoney.com
Orckit Communications, Kern's other tech darling, is based in Tel Aviv and specializes in DSL, or digital subscriber line, technology. Essentially, Orckit's products boost the speed of copper-wire telephone lines to broadband-like performance. The idea is to help phone companies compete in Internet delivery with cable providers, whose lines into the home have much more capacity than copper.
Orckit has penetrated the European market with both ADSL (which is swiftly becoming the standard DSL technology) and a special type of high-speed DSL called HDSL. It has forged alliances with Deutsche Telekom (DT) and Fujitsu (FJTSY). Now, with a number of other telephone companies -- including France Telecom (FTE) and Telefonica (TEF) of Spain -- ready to accept bids on DSL contracts this year, the potential is there for even more growth.
At the moment, Orckit has no earnings. Like a lot of tech companies speculating on the Internet, it has consistently lost money -- last year it dropped $4.8 million, or 26 cents a share. "Everybody talks about, 'Well, Orckit's not making money,'" explains Joel Achramowicz of Preferred Capital Markets, "but none of these guys are going to make money. Look at Copper Mountain Network (CMTN). I mean, Jesus, they're valued at $1.4 billion. Unbelievable! OK, whatever!"
Analyst Rob Goldman of Josephthal & Co., however, predicts that Orckit will start earning money in 2000 on revenue of $170 million. He says the International Telecommunications Union will formally ratify the G.Lite ADSL standard later this month and within the next year, computer vendors like Dell Computer (DELL) and Compaq Computer (CPQ) will feature DSL modems or modem add-ons on their PCs. "It will jump-start things," he says.
For Kern, all that matters is that these stocks continue to perform until they grow out of his microcap range. "When the growth is as strong as it is -- whether it be in ADSL or in fiber channel -- there's enough room for everybody to do well, at least in the early stages," Kern says. "And we're still in the very early stages. But now, you have to continue to monitor and see what develops in the future." The same could be said of his fund and the budding microcap recovery. Stay tuned. |
