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Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..] -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (681)	9/27/1999 12:26:00 PM
From: SteveG	Read Replies (2) \| Respond to of 1860

PCS '99 WRAP-UP--WIRELESS DATA STARTING TO EMERGE--WHO BENEFITS Deutsche Banc Alex. Brown - US Equities Brian T. Modoff September 27, 1999 HIGHLIGHTS: Comments post last-week's wireless conference in New Orleans. Wireless data was clearly the over-riding theme at the conference. Handset vendors such as Motorola, Nokia, Qualcomm, Samsung and Neopoint demonstrated the capabilities of their products to deliver Internet content to the subscriber. Software/application vendors such as Phone.com, Razorfish, Tegic and Schlumberger demonstrated technologies that allow consumers to access internet sites, enter messages quickly and enabling applications such as wireless banking. Wireless internet portal application/content service providers such as @Road, Yahoo and Sariade.com demonstrating Internet services customized for mobile utilization such as location specific data filtering. Conclusion, the wireless industry is quickly moving to embrace the Internet to push mobile services beyond simple voice communications. The implementation of these new capabilities should have several impacts on wireless networks including: increasing wireless penetration and replacement rates as wireless devices move beyond simple voice communication devices to ones also supporting Internet/email access, electronic commerce and geolocational services. increasing network capacity to support higher traffic levels and accelerating in implementation of Internet protocol (IP) routing and switching equipment. Companies under coverage that we believe are set to benefit from these trends include Motorola, Nokia and Ericsson (advanced wireless devices, capacity expansion and IP infrastructure), Qualcomm (software, silicon and applications), DSP Commuications (software and silicon), Powerwave (capacity expansion), and Tekelec (IP infrastructure). *See our "Finlandization of the World" report for a more detailed discussion of wireless data, handset trends and the competitors. COMPANY UPDATES Powerwave Powerwave continues to benefit from the significant capacity expansion underway in the US and abroad to accomodate increasing subscriber minutes of use. Due to this capacity expansion, the current quarter is tracking quite strongly in terms of revenues, orders and margin improvement. Further, as evidenced by recent accouncements by the competition (Spectrian with Nortel and MPD with Lucent), Powerwave continues to gain market share. Our current revenue and earnings estimates do not include the recent major contract win by Nortel with AT&T. Nortel anticipates installing equipment into AT&T's network starting in 4Q. We anticipate upward adjustments to revenues and earnings once order forecasts can be determined. We anticipate that the company will beat our 3Q revenue and earnings estimates. We reiterate our Strong Buy rating and twelve month price target of $55 (50 our conservative FY00 earnings estimate of $1.10) Tekelec Interest in Tekelec's products for integrating packet and voice networks is strong. Tekelec's scalable, open architecture switching platform and gateway controller offer capabilities and interoperability unmatched by the competition, in our view. The company is involved in a number of discussions with both OEMs and carriers regarding its products. These potential customers/partners are starting to appreciate the significant technological advantages of Tekelec's products versus the competition. While the current quarter is as back-end loaded as a normal Tekelec quarter, we believe that the company has an excellent chance of meeting our 3Q revenue and earnings forecasts of $62.1 million and $0.13 (consensus is $0.13). We reiterate our Buy rating and twelve month price target of $24 (40x our FY00 earnings estimate of $.60) Andrew Corp. During the conference, we conducted channel checks with RF cable distributors to obtain information regarding cable pricing and demand. In addition, we visited with the company to get a read on current business trends. According to distributors, RF cable pricing conditions continue to be difficult with price discounts being offered of up to 65%-70% off list price, regardless of the size of the order. The company is attempting to offset some of this pressure via its recently introduced "jumperless cable" product. This product meaningfully reduces cable installation time and reduces signal loss via the elimination of jumpers. Further, this new cable improves the company's competitive position versus Comscope and Cablewave. However, according to the company, while demand in markets such as China remains robust, and demand in previously down market such as SE Asia is recovering, demand in other emerging markets such as Brazil is soft. Consequently, we anticipate the Andrew Corp (over 50% of revenues and earnings are derived from RF cable) will report 4Q revenues and earnings on the low end of expectations (we are forecasting revenues and earnings of $205.5 million and $0.19 versus consensus of $0.21). In addition, we anticipate that gross margins will remain under pressure. We reiterate our Market Perform rating.