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Technology Stocks : Aware, Inc. - Hot or cold IPO? -- Ignore unavailable to you. Want to Upgrade?

To: ayahuasca who wrote (8353)	4/6/2000 12:45:00 PM
From: GP Kavanaugh	Read Replies (1) \| Respond to of 9236

Love the name by the way..... Here's some analysis: 08:32am EDT 6-Apr-00 Stephens Inc. (Charles Pluckhahn 617-239-7514) STPH AWRE z AWRE: Lucent/Aware Partnership Expands to Include Full-Rate ADSL Stephens Inc. Research Bulletin ______________________________________________________________________________ April 6, 2000 AWARE, INC. Lucent/Aware Partnership Expands to Include Full-Rate ADSL; Samsung on Board Aware's relationship with Lucent Microelectronics has expanded to include full-rate ADSL along with G. Lite. On Tuesday, Lucent announced that it will deliver both ADSL algorithms in its WildWire ADSL modems to be used by Samsung Electronics in PCs. Modem shipments are underway, according to Lucent. Both forms of ADSL software come from Aware, Inc. Prior to the announcement, Lucent WildWire had been a G. Lite-only product. Going forward, we expect Lucent to incorporate higher-layer networking functionality to compete with Virata Corp., which on March 6 announced that it would add G. Lite/full rate physical connectivity to its higher-layer networking capability. The Lucent announcement highlights a shift that we anticipate within the ADSL market space this year, as trials turn into wider deployments. We expect vendors to include value-added features and applications in their hardware, and we believe Aware's premier position in the industry will become more widely apparent. In addition, we think the global nature of deployments will become more fully appreciated, as carriers in Asia and Europe begin large-scale ADSL rollouts. In March, Virata told investors that its combined networking and physical-layer solution would be ready for shipment by June and that it would displace WildWire at some customers. Our opinion was that Lucent would respond by adding full-rate ADSL to WildWire and that we expected both Lucent and another Aware licensee, Intel Corp., to incorporate higher-layer networking technology, as well. This week's Lucent announcement is, in our view, that company's first step toward answering Virata's press release. Intel has already taken steps down this path, including an announcement on March 21 that it would acquire Basis Communications, a private company that provides higher-layer networking capabilities intended for use in DSL-enabled devices. On March 30, Intel announced that it would bundle firewall security software with its first generation of ADSL modems, and yesterday the company said it would release a 10 megabit wireless home networking technology. We believe that when Intel launches its next generation of ADSL products later this year, these products will incorporate Aware's physical lawyer software and will be highly competitive on price and features. Our forecast of $30 million in revenues and EPS of $0.38 in 2000 (pro-forma fully taxed EPS is projected at $0.24) is based on our view that Aware will hold 40%-50% of an ADSL chip market of 9.3 million units. We think our market-size estimate could be quite conservative, but we're not yet changing any financial projections. We are, however, reiterating our BUY rating on Aware's shares, with a one-year target price of $61 per share. We note that, in a market that appears to be sorting concepts from earnings, Aware has been tracking our projections closely since we initiated coverage in the fall of 1998. The Company is one of the few ADSL "stories" with earnings attached, and from our vantage point its fundamentals continue to improve. AWARE, INC. FYDec. EPS Prior Est. AWRE- $42.38 Rating: BUY 99A $0.21 Price Target (12 mo.): $61.00 00E 0.38 NC Charles Pluckhahn (617) 239-7514 01E 0.56 NC Publicly traded companies mentioned in this report: Intel (INTC - $129.88)) Lucent (LU - $62.38) Samsung Electronics (SSGUF - $18.19) Virata Corp. (VRTA - $111.38) Privately held companies mentioned in this report: Basis Communications Stephens Inc. maintains a market in the common stock of Aware, Inc. and may act as principal in these transactions. BUY-one-year price appreciation expected to be greater than 20%; MARKET OUTPERFORMER-one-year price appreciation expected to be between 10% and 20%; NEUTRAL-one-year price appreciation expected to be less than 10%; SELL-whenever warranted. This report has been prepared solely for informative purposes and is not a solicitation, or an offer, to buy or sell any security. It does not purport to be a complete description of the securities, markets or developments referred to in the material. All expressions of opinion are subject to change without notice. The information is obtained from internal and external sources which we consider reliable but we have not independently verified such information and we do not guarantee that it is accurate or complete. We do not undertake to advise you to any change in figures or our views. We, our employees, and/or our officers and directors, may from time to time have a long or short position in the securities mentioned and may sell or buy such securities. Additional information available upon request. Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, (501) 374-4361, FAX (501) 377-2666, Member NYSE, NASD, SIPC First Call Corporation, a Thomson Financial company. All rights reserved. 888.558.2500