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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (4631)	1/20/2000 10:50:00 AM
From: Sir Auric Goldfinger	Read Replies (3) \| Respond to of 19428

WSTL: Oh well, I am staying for the duration. Jeffries is nobody in tech, stock done: "JEFFERIES** Westell Technologies (WSTL) - $14 1/2 Joseph J. Bellace (212) 284-2021 Westell Technologies - Revenue Mix Is Quite Diversified Rated Buy 52 Wk Range $14- $4 FY Mar 1999E 2000E 2001E Shares Out -FD(MM) 36.6 Revenue 93.2 107.9 145.0 Est Float (MM) 15.6 Net Inc (34.2) (11.2) (1.6) Avg Dly Vol (MM) 0.55 EPS (0.94) (0.30) (0.04) Equity Mkt Cap (MM) $530.3 Rev Multiple 5.7x 4.9x 3.7x Long Term Debt (MM) $1.7 P/E NM NM NM ($MM), except per share data. We are initiating coverage of Westell Technologies with a Buy rating and a 12 month price target of $17. This is derived by applying a price-to-revenue ratio of 4-times estimated revenues of $135 million in calendar year 2000. Westell is a holding company for a subsidiary that offers a broad range of products that facilitate the transmission of high-speed digital and analog data between a telephone company's central office and end-user customers and Conference Plus, an Application Service Provider that manages and hosts audio, video, and IP conferencing services. Corporate Profile. Westell was started in 1980 and became a public company in November 1995. The company's core business is called Telco Access products. These products are used to terminate special circuits (like T1 circuits) in the local loop for telephone companies. A second line of business is Digital Subscriber Line (DSL) products, which enable telephone companies to provide interactive multimedia services over copper wire while simultaneously carrying traditional telephone services, thus mitigating the need for the telephone companies to install second lines to support these services. A third business area is Conference Plus, a service company that allows multiple individuals and/or businesses to conduct conference calls using a combination of voice, video or data such as graphs or spreadsheets. Unique Capabilities in the DSL marketplace. The equipment needed to enable a DSL link generally consists of two types, one in the network operator's central office (a DSL access multiplexer or DSLAM) and one at the customers premise (CPE). Westell designs and manufactures both DSLAM and DSL CPE equipment. There are several factors that differentiate Westell from their DSL competitors and these include: - In central office space, Westell participates in conjunction with partners, as a supplier of technology and components, rather than compete directly with larger companies. Fujitsu Telecom Europe and Lucent are the best examples of these relationships. - In the DSL CPE market, the company has a very targeted strategy, aimed at small businesses and consumers who need value-added products or wish to network multiple PCs into a high-speed connection. The revenue mix is quite diversified. Westell derives revenues from three product business units and the Conference Plus subsidiary. Our forecast of revenues is shown below: March 1999March 2000March 2001 HiCap57.553.551.5 Transport9.511.515.0 CPE4.810.733.5 Conference Plus21.332.045.0 TOTAL93.1107.7145.0 ($ in millions) The HiCAP business unit represents about 50% of company revenues in fiscal 2000 and will be relatively flat in revenues in fiscal 2001. The products designed and manufactured by this business unit are used to maintain, monitor, and repair special circuits in the local loop and include PROACT Network Interface Units (NIUs), DS-3 MegaJack, and SlimJack mountings. The deployment of HDSL systems in the U.S., which reduces the need for T-1 repeaters used to boost transmission quality, will result in a decrease in demand for Westell's T-1 products such as NIUs. We estimate that NIUs will contribute $45 million in fiscal 2000 (about 87% of HiCAP revenues) and decline to $42 million in fiscal 2001. This is a key factor in the relatively flat revenues of $51.5 million that we are forecasting for the HiCAP business unit in fiscal 2001 The CPE business unit (about 10% of company revenues in fiscal 2000) is forecasted to more than triple in revenue to $33.5 million in fiscal 2001. Growth at this business unit will be fueled by DSL deployments, web commerce, voice over DSL services (VODSL), and the company's ISP sales channel. Major products include the company's WireSpeed modems and WireSpeed ADSL routers. We expect good visibility in this business unit in the December 1999 and March 2000 quarters as Bell Atlantic and British Telecom ramp DSL shipments. British Telecom has stated that they will deploy DSL equipment to 400 central offices by March 2000 with 50% supplied by Alcatel and 50% by Fujitsu. Westell will provide DSL (DSLAM and CPE) products to Fujitsu. Conference Plus (about 30% of company revenues in fiscal 2000) is forecasted to record more than 40% revenue growth to $45 million in fiscal 2001. Conference Plus is an Application Service Provider that manages and hosts audio, video, and IP conferencing services. The company is expanding faster than the conferencing industry growth rate of 35% per year due to the following trends: 1) It is expanding geographically into the European market. 2) The private-reseller business, where the company provides complete private label services to major telecom carriers, continues to show significant growth. 3) New IP and Internet applications provide significant, additional revenue sources. Revenue and EPS Estimates. On December 13, 1999, Westell announced plans to acquire Teltrend for about $205 million, in common stock. We expect the proposed acquisition to be completed in March 2000 and have not included the revenues and EPS in our financial models. For fiscal 2000, we estimate 16% revenue growth to $107.9 million and loss of $0.30 per share. Based on 34% revenue growth to $145 million in fiscal 2001, we are estimating a modest loss of $0.04 per share. Public companies mentioned in this report: ALA $40.9 NR BEL $57.6Buy"