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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (25206)	2/16/2000 12:07:00 PM
From: Johnny Canuck	Read Replies (3) \| Respond to of 68233

Harmonic gets top pick status at individual investor... individualinvestor.com An excerpt pertinent to HLIT... If cable suits your fancy, one of the better mid-cap plays around today is Harmonic (NASDAQ: HLIT - Quotes, News, Boards). Harmonic, which sells to customers like AT&T, Time Warner (NYSE: TWX - Quotes, News, Boards), Cox Communications (NYSE: COX - Quotes, News, Boards) and Charter Communications (NASDAQ: CHTR - Quotes, News, Boards), reported 1999 net sales of $184.1 million ($63.3 million in the fourth quarter) and earnings of $0.76 per diluted share. This compares to a loss of $0.92 in 1998. Harmonic designs and makes digital fiber optic systems, including optical transport solutions - primarily devices that provide a ?return path? in hybrid fiber optic/coax cable lines. This technology enables information to flow in two directions over cable lines (e.g. both to and from a consumer's PC). We expect all of these companies--JDS Uniphase, Corning, SDLI, Newport, Digital Lightwave and Harmonic--to outperform the year-ahead market. Because of supply constraints in the industry and the rapid growth rates dictated by the massive capital spending of the larger players up the food chain, we believe the only real risk these companies face in the next 12 months revolves around execution ? managing their own rapidly growing manufacturing capacity. Over the long-term, we suspect the smaller companies in this group will likely be acquired down the line. The leaders in their respective markets will likely remain so. The barriers to entry in the sector will grow larger as established companies forge deeper relationships with the equipment makers they supply. Because the components sold need to be ?best in their class,? companies will not easily switch to new vendors. Given that the systems get buried beneath the ocean or stretched out across deserts, carriers will stay with suppliers who prove their technical competency in actual service. Both these high ?switching costs? and the movement in the industry toward one-stop shopping make it unlikely that any of the new companies now coming public will ever be able to amalgamate itself into the next JDS Uniphase. The leaders in the sector are likely to get even larger, as the advantages of becoming an end-to-end supplier become more evident. Bottom Line: Our favorites for the year-ahead: Corning and Harmonic. Because the ramp-up of these optical networks will take the better part of the decade, investors are advised to buy and hold for long-term gains.