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Technology Stocks : Terayon - S CDMA player (TERN) -- Ignore unavailable to you. Want to Upgrade?

To: CRay33 who wrote (442)	4/11/2000 7:22:00 PM
From: Pluvia	Read Replies (2) \| Respond to of 1658

if they just resell modems, why are their gross margins higher than those of competitors like cmto. Good question - because they gave their three largest customers SHAW, ROGERS and Sumitomo discounted stock/options. The margins on sales to these companies is almost twice the margins on sales to any other company... More than very fishy... Gee you think they got a deal going with these three guys to try to make TERN'S revenue numbers look good? I know I would if I had a $500 million stock position given to me at discounted prices... All comments are the EXPRESS opinion of the Author - all rights reserved...

To: CRay33 who wrote (442)	4/11/2000 9:24:00 PM
From: pat mudge	Read Replies (1) \| Respond to of 1658

1. The letter is old news, and isn't out of the ordinary. The letter may be dated but it's not the letter that's news. It's the fact TERN kept it hidden that is. If the letter were an ordinary event and not something to be ashamed of the company would have made it public. The SEC is clear about material events and management's responsibility to announce them publicly. The point being it's not fair for insiders to trade on information not known by all. 2. Companies regularly (when starting out) give warrants as part of a large sale. Commerce One, Matrix One, and many other companies have done this - no big deal. You're right. However, each case is different and in the case of Rogers, the warrants were given disguised as a co-development agreement, and with Shaw as a financing arrangement. Because of the enormous profits to each company, they could skim off some of the excess and pay premiums above industry-standard ASPs and make modem sales appear far more than they actually were. Why do you think the "pro forma" number in this quarter's earnings is so radically different from fully diluted? If you add into cost of sales the $9,563,000 "cost of product development assistant agreement," you end with EPS of (.21). And if you eliminate the interest income (as a one-time event), you end with (.30). (In condensed consolidated numbers, they factored in 6.329, not the full 9.563 listed in the product assistance agreement.) To get to the fully diluted loss of 1.04, you factor in acquisition costs, a valid exercise and one that no one questions. As for a fair EPS, if you look at the differences between the "pro forma" and condensed consolidated numbers you will notice operating costs were lower in all the standard categories by the following amounts: R&D $560,000, S&M 478,000, G&A 166,000, for a total of $1,037,834.00. That comes to .03 per share, or an adjusted loss per share of .33 for the quarter. Considering the year-ago quarter had a loss of .32, that wouldn't have looked good in company headlines. Since I didn't listen to the conference call, can you tell me what the break-out for products was? In years past modems and head-ends were listed as well as numbers of homes passed. Since CMTO reports on Thursday it would be good to have these figures handy for comparison. TIA --- Pat