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Technology Stocks : Echelon Corporation (ELON) -- Ignore unavailable to you. Want to Upgrade?

To: Garth Richmond who wrote (2115)	5/17/2000 8:17:00 AM
From: Lone Star	Read Replies (2) \| Respond to of 3076

Very expensive, if one thought there was no move afoot to exceed 30%. One might want to have by this time a deep insight into the company, the mgmt., their market opportunity and competitivie position, etc. You know, something beyond what anyone could uncover with two minutes worth of dd. By the way, Echelon does not manufacture neuron chips (Toshiba, Cypress, and Moto do ), nor make anything of signifigance licensing on neurons ( as you correctly note- small fee).

To: Garth Richmond who wrote (2115)	5/17/2000 1:04:00 PM
From: hueyone	Respond to of 3076

I don't believe the previous guidance for 30% forward sales growth takes in to account the Enel agreement. According to my rough calculations, aggregate forward revenue for the next three years has suddenly increased from about 220 million by 300 million to 520 million. An argument could well be made that we are now looking at 90% year over year forward revenue growth rate instead of 30% year over year forward revenue growth rate. Maybe someone can check with Stansfield to see whether my growth assumptions are correct. On the basis of the above calculations and for several other reasons, I relonged at 34 the day the Enel memorandum of understanding was announced. I did not have enough appreciation of the vision to hang on to Elon at high prices in early March. But the Enel agreement moves Elon beyond the realm of a story stock for me. I am especially cognizant of the likelihood that Elon will be able to more than double expected revenues by completing just one agreement with just one company (Enel) in just one country. A few more agreements like this and the stock price could suddenly go from being very expensive to very inexpensive, and next time I might not be so lucky to read the announcement at 4:30 in the morning. At 65 and even at 34, Elon is still very expensive and would definitely be a loser if the Enel agreement turned out to be the only agreement. And I think the Enel announcement would be more impressive were it binding and there was not equity tied to it. So purchasing Elon still involves considerable risk, but the risk/reward profile improved considerably with this announcement of the memorandum of understanding. I am willing to speculate the Enel agreement will be completed and that better deals will follow. Three quotes from the announcement really caught my attention: "I have always said that there is going to be an earthquake along the way that is going to change the whole landscape," said Kenneth Oshman, Echelon's chief executive officer. "I believe this is that earthquake." The services that Enel plans to provide in Italy are the same types of services required by utilities an telecommunications companies in countries throughout the world -- and the same LonWorks system infrastructure can be applied to these countries as well. Even more important, however, is the possibility that Enel's move will accelerate the use of technology that ties all manner of appliances and business machines to each other and the Internet. Best regards, Huey