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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (5157)	4/29/2000 12:23:00 AM
From: LTK007	Read Replies (3) \| Respond to of 19428

i tracked down the text----and it written by a momo type--and thusly POLITELY slams the stock << Aether: Time for Profit Taking Kenneth A. Toudouze, CFA Apr 28 2000 Wireless solutions company Aether [AETH] reported earnings yesterday, but while they were impressive, they may not be enough to sustain the company?s lofty valuation. Its quarterly numbers showed a strong move upward, but so has its stock. At $165, Aether is up 100 percent from its three-month low of $71, hit less than two weeks ago. Growth was strong in the first quarter, but we don?t think it is enough to justify the current price. Take your profits and sell the stock. The company beat expectations on almost every metric reported. Revenues hit $5.4m, well above the $4m expected on Wall Street. EBITDA (a measure of cash flow) of -$12.5m also beat expectations of -$17m. Net income was -$33.3m. The incremental revenue above expectations was generated through the licensing of Aether?s software. This was mainly derived from the acquisition of Riverbed Technologies, but the ramp up to revenue generation was faster than anyone expected. This is leading many brokers to raise their Aether revenue estimates for 2000. However, while these numbers show strong growth, investors need to look at the big picture. Beating estimates by 25 percent is great, but revenues are still only $5m. Think about that for a second? $5m in quarterly revenue for a company that commands a market cap of $3.6bn. Based on revised 2000 revenue estimates of $34.1m, the company is trading at 106x projected sales. In order to justify its current market cap at a reasonable future price/earnings ratio, Aether needs to reach $1.3bn in revenues in five years. Recall that our Phone.com [PHCM] revenue model projects the company achieving $1.1bn in year-five revenue. Aether?s management has shown vision in its growth and acquisition strategy, but a $1.3bn revenue target is a pretty tall order. There are a number of analysts out there with price targets north of $250 using discounted cash flow models. To reach targets in this range, analysts are assuming revenues in excess of $15bn by year 10. At this stage in the game, no one can predict what kind of numbers Aether will be able to generate in 10 years, but there are only a handful of companies with annual sales above $15bn. We believe Aether will be a serious player in wireless data, but we can?t justify the risk created by the expectations built into this stock. One slip-up by management, a quarter of missed numbers, or even another Nasdaq correction could damage the stock. In these turbulent times, we suggest investors who followed our earlier advice limit their downside risk and use this earnings-driven rally as an opportunity to take some profits and abandon the stock.>>