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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (1413)	3/9/2000 12:11:00 AM
From: Tunica Albuginea	Respond to of 3891

Agilent?s $23bn Switch? Pffft. Fayad Abbasi streetadvisor.com Agilent?s $23bn Switch? Pffft. Fayad Abbasi ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Mar 7 2000 ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Agilent Technologies [A] announced at the ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Optical Fiber Conference in Baltimore Monday ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ that it has developed a photonic switch, ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ prompting an explosion in its market value ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ from $48.8bn on Friday to $71.9bn at ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Monday?s close. However, we seriously ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ caution investors about the purchase of ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Agilent shares at this time. While we ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ appreciate the extraordinary significance of ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ optical switching technology, we are left ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ scratching our heads when the market adds ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $23bn to Agilent?s market cap, particularly as ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the total addressable market in 2003 is ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ expected to be closer to $12b. ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿ Currently, the technology for routing optical ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ data in fiber-optic circuits must be done in ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the electrical realm. The process is as ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ follows: ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 1.Light signal converted to an electric ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ signal; ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 2.Router establishes where the signal ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ needs to go; ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 3.Signal redirected; ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 4.Signal converted back to light; and ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 5.Light signal sent along its merry way. ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The conversion process is a tremendous ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bottleneck for optical fiber transmission. An ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ all-optical network increases transmission ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ speed, lowers costs, and frees up valuable ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bandwidth. By using a photonic solution, ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Agilent is among the first companies to ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ develop the technology that greatly enhances ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the speed-of-light transmission. ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ When we look at the market opportunity, ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ however, Monday?s price action looks to be ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ driven more by hype than reality. Agilent ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ shares closed at $108 on Friday, March 3. On ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Monday, shares reached a high of $161 ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ before closing at $159. With 452m shares ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ outstanding, the market value of Agilent rose ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ from $48.8bn to $71.9bn, or about $23bn. ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The company?s press release said the market ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ opportunity could grow from $15bn in 2000 to ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $40bn in 2003. With approximately 30 ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ percent of the market opportunity expected ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to be optical switching, the total addressable ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ market for the product is $12bn. Given its ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ early position in the market, Agilent could ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ conceivably achieve a market penetration of ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ close to 25-30 percent. Therefore, at best, ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ aggressive revenue expectations are closer to ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $3.5bn for Agilent as a result of the product ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ announcement. In other words, the market is ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ now valuing Agilent at 6.5x aggressive ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ revenue potential in 2003. ÿ ÿ ÿ ÿ