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Technology Stocks : Next Level Communications Inc. (NXTV) -- Ignore unavailable to you. Want to Upgrade?

To: Rob Pierce who wrote (96)	9/11/2000 7:17:54 PM
From: Rob Pierce	Read Replies (1) \| Respond to of 131

Warburg Dillon Reed - Reit. BUY - $160 1 yr. target - 8 Sep Details from Yahoo: messages.yahoo.com Summary: In this note we recap Qwest's recent comments on its VDSL plans. We also shed some additional flavor on what we believe are opportunities far larger than Qwest would be in 2001 and 2002 -- Korea and Europe. Initially, we believe that Korea will be the most aggressive deployer with tests in 2000 and a very aggressive rollout in 2001, while the Europeans would still continue to test into 2001 with a major set of rollouts for late 2001 or 2002. Next Level will be presenting together with Korea Telecom, Hanaro, and Paradyne Networks (PDYN-$20-Buy) at the UBS Warburg TeleTech conference in Seoul September 18-20. Highlights: · We believe Qwest's comments on VDSL technology and rollout confirm the thoughts we laid out in our First Call a week ago. Deployment in Phoenix, AZ, will continue, while new chips designed to significantly lower the cost of the set-top should enable a much less expensive device by mid-2001. · We believe the lower cost of deployment, which includes the lower-cost set-top as well as faster installation times using wireless in-home networking from Proxim (PROX-$60-Strong Buy), will serve as key catalysts to take deployment from only Phoenix, AZ, into other markets such as suburban Denver, CO, and Tuscon, AZ. · Qwest gave Next Level a resounding technology endorsement on its conference call. They also clearly indicated that deployment is being held back for economic reasons alone. Given the relative lack of a competitive solution, we believe that there is still substantial upside potential in the Qwest account in 2002 and beyond, assuming the cost of deploying this platform comes down significantly in 2001. In the meantime, we believe the DLC rollout in several states and the VDSL rollout in Phoenix, AZ, will continue to generate revenue for Next Level. · We believe that it will now be relatively quiet on the Qwest front for a while as they work out some improvements to the platform over the next several months. At this point we turn our attention East - to Europe and Korea. We believe that Korea Telecom, followed after a few months by Hanaro, will be the most aggressive deployer of VDSL by Next Level. In all, we believe the Korean opportunity for Next Level could be significantly larger in 2001 and beyond than Qwest, which constituted 67% of June quarter revenue and we believe would constitute around 50% of September quarter revenue. · After Korea and on a smaller initial scale - but we believe with more operators behind it - would be Europe. In particular, we believe that the PTTs in Spain, Norway and France will be the first to roll out VDSL by Next Level on a field trial stage in 2001 and then likely with full force in 2002. Other PTTs that we believe will be on a similar long-term schedule, but with potentially a slower initial start, would be the PTTs in Germany, Italy, and in the British Isles. · In all, we believe that the emergence of the new international opportunities - with Korea Telecom being the most important in practice - should serve as a good set of catalysts for the stock. While the stock is the most expensive in its peer group, we believe this is also the company with the highest barriers of entry, and thus should warrant a significant premium valuation. We maintain our one-year $160 price target.