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Gold/Mining/Energy : Pinetree Capital-PNP-CDNX -- Ignore unavailable to you. Want to Upgrade?

To: New Economy who wrote (138)	2/1/2000 5:21:00 PM
From: New Economy	Read Replies (1) \| Respond to of 233

Recent Deals in the Fiber Optic Industry (I know, I know old news) During past week, two emerging companies that operate in the fiberoptic space, have been acquired by industry leaders, Nortel Networks and JDS-Uniphase. Oprel Technologies, an Ontario-based developer of erbium-doped fiber amplifiers (EDFAs) and other optoelectronic devices, was acquired by JDS-Uniphase for an undisclosed price. Nortel announced the acquisition of Qtera Corporation today for a total price of US$3.25 billion in stock. Qtera makes equipment that allows a photonic signal to be transmitted over large distances without having to be converted to an electronic signal for re-transmission. This could potentially reduce the need for opto-electronic amplifiers and speed up the transmission of data over a fiber optic network. Qtera will not have products until sometime in 2000. What this means for Lumenon - We are quickly entering a second wave of optical component manufacturing. This second wave involves the production of inexpensive optical components (Waveguides, Amplifiers, Lasers, etc.) needed for entry into the Metro and Access fiberoptic network markets. The bottleneck for expansion into these markets, is the lack of availability of inexpensive optical components that increase the efficiency of existing networks. The industry is betting that this bottleneck will be relieved by technologies from innovative companies, such as Lumenon. Update on Operations Lumenon is in an enviable position, in that its optical waveguide product is close to becoming commercialized - through Molex (MOLX: NASDAQ) - and sold to OEMs internationally. The Company, along with Molex, continues to test the packaged optical chip, and is on track for production of the chips by spring 2000. There is no reason to believe that testing of the package will not be successful, and the Company is confident that the packaged product will be ready to be unveiled at the OFC'00 (Optical Fiber Communication Conference 2000) in Baltimore, MD on March 3-10, 2000. Financing and expansion - Molex recently has committed to investing an additional US$3 million in the Company - representing 129,707 shares at US$23.19 per share and approximately 65,000 warrants, exercisable at 125 % of this price - as part of a US$20 million equity financing required to fund its previously-announced expansion plans (the location of the new facility is very close to being finalized - and will be located close to the Company's existing facility in Dorval, Quebec, and with approximately 30,000 square feet in size). The investment itself is not as important as Molex's decision to not be diluted in the current round of financing. We view this as a very favorable development in that it indicates Molex's continued confidence in Lumenon and the progress of the product's testing phase. We believe that investors should take advantage of any opportunity to buy LUMM at levels at or below the price Molex recently paid in the current round of financing. Nasdaq Listing - The Company expects to receive full Nasdaq (National Market) listing by the middle of January 2000. This may create additional volatility in the stock price. Conclusion We believe that LUMM stock is undervalued at current levels and that this represents an attractive buying opportunity for investors. The fundamentals of the Company, in our opinion, have not changed since our recent report (November 12, 1999). The Annual General Meeting, held on December 7, 1999, exposed the Company to a broader investor base. In addition, there was speculation on a takeover possibility as a result of the indirect association with Cisco Systems (CSCO: NASDAQ), through the participation of Dr. Jacek Chrostowski, Technology Program Manager in the Optical Internetworking Business Unit at Cisco Systems Inc. (Lumenon's Technical Advisory Committee) and, most recently, the appointment of Pierre-Paul Allard, General Manager, Cisco Systems Canada to Lumenon's Board of Directors. Bottom Line - Lumenon continues to be well positioned for rapid growth in photonic chip design and manufacturing, due to their early entry into this large and growing market, their proprietary technologies, as well as their packaging and distribution relationship with Molex. We are maintaining our Speculative BUY recommendation on Lumenon, with a 12-18 month target price of US$29.00. An investment in LUMM is particularly suited for investors with above-average risk tolerance, who are seeking a potential for capital appreciation and who have diversified investment portfolios. The information contained within has been obtained from sources which we believe to be reliable, but we cannot guarantee their accuracy or completeness. This report is not, and under no circumstances is to be construed as, an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that GroomeCapital.com Inc. is to be under no responsibility or liability whatsoever in respect thereof. The inventories of GroomeCapital.com Inc. and the holdings of its respective Directors and Officers may, from time to time, include the securities mentioned herein. No part of this report may be copied or reproduced in any manner without the prior written consent of GroomeCapital.com Inc.