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

To: Scrapps who wrote (8979)	5/19/2000 8:08:00 AM
From: Paul Lee	Read Replies (1) \| Respond to of 9236

Dow Jones Newswires Aware Inc. Up 20% On Analog Devices Rev Outlook Dow Jones Newswires By Jason Overdorf NEW YORK -- Shares of Aware Inc. (AWRE) soared as much as 22% Thursday on the strength of Analog Devices Inc.'s (ADI) forecast of a 65% increase n revenue increase in 2000. Michael Neiberg, an analyst who covers Aware for Chase H&Q, said a portion of Aware's revenue stream is directly related to Analog Devices' digital subscriber line, or DSL, chip revenue. Rick Moberg, Aware's chief financial officer, explained, "In their second-quarter conference call yesterday, Analog said one factor in their revenue growth was strong sales of DSL chips." Analog also raised its 2000 DSL chip sales forecast to 6 million chips from 4 million. Under an existing licensing agreement, Aware receives royalties for the DSL chips Analog sells. The increase, Moberg said, "has a very positive impact on us." Analog Devices' Chief Executive Jerald Fishman told CNBC Wednesday the company expects a 65% jump in revenue, saying that the "exploding" communications market is likely to continue. Shares of Aware recently changed hands at 42, up 4 1/2, or 12%, on composite volume of 1.7 million, compared with average daily volume of 557,310. Earlier Thursday the shares traded as high as 45 5/8. The shares gained 4.5% Wednesday. Analog Devices shares are at 73 3/16, down 5 /16 on volume of nearly 3 million compared with average daily volume of 3.2 million. Shares had closed Wednesday up 8.5%. The announcement from Analog Devices prompted UBS Warburg to raise its 12-month price target for Aware to $100 from $68 and to reiterate its strong buy rating, another possible reason for Thursday's gains. "The one cloud we see on the ADI horizon," UBS Warburg said in a research note Thursday morning, "remains the notion that ADI will also make DSL without Aware software." That could cut into the royalty revenue Aware receives. According to Anton Wahlman, an analyst who covers Aware for UBS Warburg, Analog Devices "did make a comment in answer to whether they will remain dependent on Aware that they have a parallel program in development." "I read into that," Wahlman said, to mean that "probably by 2001 Analog will have an alternative." Nonetheless, Wahlman says the diversified licensing revenue that Aware receives from other customers prompts UBS Warburg to see more positive than negative. The most exciting of those customers, according to Wahlman, is Intel Corp. (INTC), which Wahlman expects will be in a "powerful position to push" DSL technology in a few years when DSL modems take the place of internal analog modems in off-the-shelf computers. Aware's royalty customers also include Lucent Technologies Inc. (LU), NEC Corp. (J.NEC) and Infineon Technologies AG (G.IFT), among others. Aware's Moberg downplayed Wahlman's inference about Analog Devices developing its own chipset. "They made a comment at the very end of their conference call about a chipset that they're working on independent of us," Moberg said. "I don't know exactly what they meant by that." "I think it's fair to say that we have a good relationship and that" Analog Devices "will continue to be a customer of ours going forward." Moberg added. "We have a great relationship, and I don't see that changing anytime soon." "We also have a diversified set of customers." Moberg said the company couldn't disclose the terms of its licensing agreement with Analog Devices. He did explain, however, that Aware works to develop chip technology for customers in exchange for upfront fees and royalties on the technologies that go to market. Because the DSL market is now relatively small, the bulk of the company's revenue comes from the upfront fees. As the DSL market grows, which it is doing very rapidly, royalty revenues will eclipse upfront fees as the company's primary source of income. -Jason Overdorf; Dow Jones Newswires; 201-938-5400