ADSP<-------------NOT A LINUX RELATED PLAY,ITS A REMOTE ACCESS PC CARD,!! not a software Company..Crims and creeps beware Im on your tail...
Dear Mr. Kernan,
Hello, I am sending this letter to provide information concerning Ariel Corporation (ADSP), a company that was mentioned several times on CNBC yesterday. Due to the misleading nature of ADSP?s 11/24 Press Release (a Press Release that was a recycling of their 10/8 Press Release -Please see below-), there was a great deal of misinformation that was stated on CNBC regarding Ariel and the merits or lack thereof of the company and it?s RS4200 product. On several occasions, CNBC stated that ADSP?s RS4200 product was a wireless Internet product. That is 100% untrue. Repeat, The RS4200 has nothing to do with wireless and this correction should be made on air by CNBC. The RS4200 is a card (that concentrates multiple 56K or ISDN modems onto the card) that can be inserted into a PCI slot on a normal PC. A small 56K or ISDN ISP could then use a RS4200 card ALONG with a PC to connect to an internet backbone to provide 56K or ISDN service. -NOTE that this solution does not apply to Cable Access nor DSL ISPs. ie. If the future is broadband, then this RS4200 ADSP solution has no future-. ADSP contends that this software/hardware solution (RS4200, PC and O/S) offers a cost advantage over 100% Hardware only devices from 3Com et al. This is misleading as they are trying to compare apples to oranges (see below). Also, please note that Briefing.com has published a scathing piece on ADSP on 11/24 (text is below: biz.yahoo.com ). The following are several pertinent points in general:
1) The RS4200 product was originally announced on 10/18. This introduction had no affect on ADSPs stock price at the time. However, the recycling of this PressRelease on 11/24 resulted in a frenzy in the stock market as you are well aware of... What was the difference the second time around? In the 11/24 release, Ariel announced that they had received ?Worldwide approvals For Connection to International Phone Networks??. A very convoluted way of saying that their system works on phone lines. All similar products from 3Com et al. are also routinely certified but are never mentioned in a Press Release. This insignificant certification news was touted in the ADSP Press Release as being a major event when it was not. In their 11/24 Vcall interview, the Sr. VP of marketing, Dennis Schneider stated that the significance of the worldwide certification was to prove that their RS4200 product actually existed! (http://www.radiowallstreet.com/Search.cfm, type in ADSP and skip to Minute 4 of the interview).
The 11/24 ADSP Press Release is an obvious rehash of their 10/18 Press release? ie. The RS4200 is not a new product. 11/24 PR: biz.yahoo.com ?Ariel's PCI-Based Remote Access Card Set Receives Worldwide Approvals For Connection To International Phone Networks?
10/18 PR?s: biz.yahoo.com ? Ariel Announces Industry's Lowest Cost Remote Access Solution? and biz.yahoo.com ?Ariel Announces New High-Density 56K/ISDN Remote Access Solution For PowerPOP-Based ISP Systems?
2) ADSP claims to offer a lower price point than comparable 100% Hardware only solutions (3Com et al). This is debatable as the cost of the PC/server in the ADSP solution must be taken into account. If an ISP were to choose the ADSP hardware/software solution and want robust performance using an NT server then the cost of the package could surpass that of a 100% hardware only 3Com solution. An analysis from a colleague in the ISP field is below. -I would be more than happy to refer you to people in the ISP and networking business to give you guidance concerning the evaluation of the ADSP product.-
> Ariel Web site provides this price comparison table:
>
>
> Ar
> Configuration: Ariel Lucent
> 96 ports: $11,995 $20,350
> 48 ports: $ 8,183 $10,850
> 24 ports: $5,543 $6,437
>
>
> Ariel claimed that each PowerPOP system essentially ships with a server for free.
>
>
> Given the above price charts, most ISP administrators would still
> go for the closed box hardware solution from Lucent, rather than the
> server-based solution from Ariel for the following reasons:
>
> 1. At the low end, the cost difference does not justify the extra
risk
> of having additional failure points brought over by the server.
>
> 2. At the high end, the price of the POP system cannot justify a
> free high end NT server (plus NT server license), so I doubt that the
> server would be free here. A NT server capable of supporting 96 users
> would cost around $10K, which would put the cost of the Ariel system
> at par with the hardware solution. Given the choice, most system
> administrators
> would prefer the hassle-free hardware solution from Lucent.
>
>3. Lucent hardware solution has been around for quite sometimes. Enough
said.
4. The Ariel solution is slower than the closed box hardwaresolution,
because it must go thru the NT router service.
3) Also, as per the Ariel website.. their pricing structure is only a promotional offer and has several restrictions.. taken from their website ?*Some restrictions apply. Offer valid for orders received through 12/31/99 for shipments to U.S. and Canada only. Quantities are limited. Shipments will begin in December. Offer applies to a specific configuration? ariel.com
4) Lastly, an important point was conceded in the Vcall interview by the Sr. VP of Marketing, Mr. Schneider. He initially stated (minute 9:45) that the market for his product was very large (10 million ports will be purchased by ISPs over the next 12 months). However, later in the interview (Minute 10:45) he concedes that the large ISPs would be uninterested in his product and he states that he is trying to go after the small ISP market instead? a market that would obviously be a small percentage of the overall 10 million ports. A market that is diminishing as the ISP industry consolidates. Therefore, it is rather incorrect for Mr Schneider to insinuate that Ariel is after the 10 Million port market? rather, ADSP is after a small and diminishing fraction of that.
P.S. below are various links/stories that may help give you perspective on ADSP
briefing.com
13:30 ET ******
Ariel Corp (ADSP) 9 9/16 +6: The top-line stinks. The company is drowning in red-ink. The sole analyst we can find who follows the stock rates it a "hold"... The one thing this Cranbury, NJ-based does have going for it is a high profile among momentum players; specifically those struck with Linux fever. The stock first came across Briefing.com's radar screen on August 30 (price at the time $2 3/4), as we combed the micro-cap community for stocks likely to be swept up in the Linux tsunami. Later that same day, in a write-up of eight potential Linux plays, we highlighted ADSP as a capital hemorrhaging venture with a shabby top-line. But as anyone who has spent time tracking momentum stocks understands, explosive moves in these stocks usually have little to do with fundamentals. Such is the case with Ariel Corp, which has rocketed as much as 280% on the day (volume 30.6 mln shares), ignited by press release touting its receipt of worldwide certification for its PCI-based RS4200 remote access card set to connect to international digital telephone networks. While many of the individuals purchasing ADSP shares today will delude themselves into thinking that this certification positions Ariel to become a major player in the international market for Linux-based remote access solutions, the fact is that you are not likely to see anyone upgrade the stock or trim loss estimates in response (at least no one reputable). In spite of what the online message boards and various stock touters would have you believe, Ariel is still a company adrift. In fact, in latest quarterly filing with the SEC, the company stated its need to raise additional funds to meet obligations through the next twelve months. The company will seek to raise such amounts through a variety of options including borrowings, proceeds from equity or debt financing and scaling back operations... In our opinion, this stock continues to be little more than a trading vehicle for speculators looking to participate in Linux euphoria. As long as Linux theme remains hot, ADSP shares will remain on the radar screen of traders. But without Linux bubble to propel stock, ADSP falls off a cliff. Happy trading. - DS
messages.yahoo.com
THE SAD TRUTH ABOUT ADSP READ!!!!!
by: cmgi_leads_internet 11/25/1999 5:23 pm EST
Msg: 3733 of 3800 I'd considering taking a position in INIT, NAVI, EXDS, CMGI (ALL GREAT, INIT all technicals are pointing to a buy signal) but I'd stay clear of ADSP. Ariel loves to mention Linux in its press releases. But it is not a Linux related company -- it sells remote access products. Not software. Not computers. And not Linux type products. Imagine you manufactured a microwave oven and in that oven, to run all the microprocessors that control the displays and timers, you happened to use Linux. Would you suddenly treat the manufacturer of the microwave as a Linux related company? NO.. you would eveluate the company as a microwave company. That is the problem here -- they are not a Linux company. They are a remote access company that is compatible with Linux... Stop the hype Ariel...
As to the remote access products... Ariel has been trying and trying and trying... They have been trying to sell these products for years.. They have touted in press release after press release amazing price points and density.. Check their own historical press releases... Find them -- see for yourself... And you know what? They can't penetrate the market... Why?
At the high end, high density of the market, the leaders are Cisco, Nortel, Lucent. Each offers carrier class products -- offering hundreds of ports per box -- not just 96. Each offers high density products that feature hot swapability, redundency and are very cost effective, particularly when in a competitive situation. At the mid to low end, each of these companies competes, along with 3COM which offers amazingly cost effective, low cost, widely accepted products. Ariel competing with Cisco, Nortel, Lucent, 3COM? I think not.
It is a very tough market -- and all that happened today was they received standard international certifications for their products. No new sales. Just the promise because of increased opportunity -- as if the lack of this certification has been holding them back.
The reality is that they have older models of these products that they have not been able to sell successfully international. What held them back before? Price per port? Not at all -- they have always been the price per port leader or nearly the price per port leader -- READ THEIR OWN PAST PRESS RELEASES.. where they claimed, to have the best price per port performance.
The fact is that their products do not address the needs of the "small company" market or the "large company" market. Small companies do not need 96 ports -- they need, cheap smaller units made by brand name players like 3COM. And their NT based architecture does not appeal to high end customers, who want Cisco, Nortel, Lucent -- who want carrier class capabilities -- who want higher density solutions --
Sorry Brad Baldwin (quoted analyst in some of today's stories) but your missing the mark if you don't see that the market is owned by the big guys.
Hope this provides insight for those who want to listen -- ADSP is a big giant short -- wait until the instututions are back on Monday.
Take a look at INIT-soild company that can potentially double or triple and alot safer. Trades at a major discount to sector and just got a strong buy rec yesterday. Expect more strong buy recs before the end of the year on INIT. |
