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Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (32068)	9/6/2000 8:55:41 PM
From: Mannie	Read Replies (2) \| Respond to of 35685

On ELON, from the Bull Market Report: Shares of networking firm ECHELON CORP. (ELON, $46, unch.) have been on the rise over the last month after AG Edwards initiated coverage of the stock at Accumulate and then subsequently added the stock to their monthly buy list. The company seems to have almost unlimited potential, and Echelon executives aren't too shy when it comes to promoting the company's products and services. They call themselves "The Cisco Systems of everyday working devices," yet this still leaves some folks wondering what they do. Many investors would be hard pressed to explain exactly what Cisco Systems (CSCO, $64, down 2) sells, let alone what Echelon does. We're here to clear up the confusion. Echelon makes hardware and software products that enable the data networking of nearly every device with an electronic heartbeat. This could range anywhere from lights and security sensors within homes to complex manufacturing equipment on the factory floor. Although residential homes represent the largest potential market for this type of networking, the majority of Echelon's products are currently used in commercial office buildings. The company's hardware and software allow a building's thermostats, lights, and security sensors to be managed from remote locations via the Internet. While many people might benefit from having these capabilities in their homes, most residential homes are not properly wired to handle Echelon's products. But eventually they will be, and when this happens we expect the new breed of "smart homes" to be running Echelon's products, especially since the company doesn't have any direct competition. But why do everyday products need to be networked? Do we really care about turning on our microwave or television while we are at a remote location? That's what many investors have been wondering, but the truth is that Echelon's products aren't quite used in that manner. Here's a good example of how networking can ultimately be used to make systems more efficient: Echelon recently signed a deal with Enel (EN, $38, down 1), an Italian electric utility, to deploy Echelon's LonWorks Platform in over 27 million homes and businesses in Italy. By imbedding Echelon's systems into electric meters, Enel will be able to connect/disconnect electricity service and read electric meters, all from the home office. Enel has estimated that the cost savings from using the system will allow it to pay for itself within three years. As another example, let's suppose General Electric (GE, $59. up 1) sells one million refrigerators over the next year. If they eventually choose to imbed Echelon's products within those refrigerators, GE would not only be able to track who owns their products, but they would also be able to detect when one of them breaks down. Imagine having a repairman at your house before your freezer even starts leaking. Now that's technology! We're very excited about Echelon's stock right now for two main reasons. The first is their deal with the Italian utility, Enel. Under the terms of their recent agreement, Enel is going to deploy Echelon's systems in nearly every building in Italy. Since energy companies are traditionally pretty conservative, many other utilities are waiting on the sidelines to see whether or not Enel's use of Echelon's products is successful. We think it will be, and we expect other electric firms to follow suit (and eventually sign their own contracts with Echelon). The Enel deal also involves a substantial investment, as Enel plans to purchase 3 million shares of Echelon stock. The second reason we are excited about Echelon stock is because on October 18-19 the company is holding its LonWorld 2000 Conference and Exhibition. This will provide a forum for the company to showcase its new technology, and we expect the investing community to keep a close eye on the conference as well. Positive news coming from this conference is sure to boost Echelon 's stock price. Widespread deployment of these types of "everyday networks" looks to be right around the corner, and Echelon is in the best position to profit from this trend. We would be aggressive buyers of the company's stock at these levels.