To: Dale Baker who wrote (11208 ) 10/16/1999 4:44:00 AM From: Dale Baker Read Replies (1) | Respond to
Digital Lightwave Inc (DIGL) 9 7/8 +1 7/8: A telecom equipment maker with triple-digit growth for under $10? What's the catch? Oh, there are quite a few... In late 1997, Digital Lightwave was a $24 stock. A couple of months later, you could have picked up the shares for under $5. The blow-up in DIGL not only put a dent in investor portfolios, but left several Wall Street analysts feeling used and cheap. Just six weeks before DIGL plummeted, a Loewenbaum & Co analyst started coverage of the then $20.50 stock with a "strong buy" rating. On the day DIGL announced it would be forced to white-out prior quarter results, an analyst at CS First Boston slashed the stock from "strong buy" all the way to "hold," the type of multi-tier move that is only done when analysts have completely lost confidence in a company. DIGL revised its revenue figures for the 2nd and 3rd quarters of 1997, to approximately $2.7 million (from $5.3 million) and to approximately $1.4 million (from $8.3 million), respectively, reductions of 49% and 83%... While Wall Street exacted its revenge by shutting the company out, angry shareholders were looking for something a little more tangible. Investors eventually recouped $4.3 mln in damages from the company after winning a class action suit alleging violation of Sections 10(b) and 20(a) of the Securities Exchange Act by, among other things, issuing to the investing public false and misleading financial information... With a new chief exec. and Who's Who list of customers, the manufacturer of network analysis equipment for monitoring, maintaining and managing fiber optic networks appears to have salvaged the ship. Today, stock has rallied to a new 52-week high, on extremely heavy volume of 2.65 mln shares (18 times avg. daily turnover), as investors applaud company's impressive Q3 results and traders respond to stock's advance through several key technical levels... For the qtr, DIGL posted earnings of $0.09, compared to a yr-ago loss of $0.17. Sales surged 105% to $14.2 mln. DIGL attributes the strong numbers to increases in bandwidth driven by Internet and other multimedia services. Customers taking delivery during the quarter included MCI WorldCom, Nortel Networks, Cisco Systems and AT&T. Would give you P/E ratios on the company, but as we said, Wall Street has shut the company out. No estimates are available. - DS
