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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: Mark[ox5] who wrote (20407)	9/13/2000 4:47:57 PM
From: Rich Wolf	Read Replies (1) \| Respond to of 21342

Markox5 re: TLTN shares and acquisition TLTN shareholders received 3.3 WSTL shares for each TLTN share, and they had a bonfire for the TLTN scrip afterwards <ggg>. I acquired the bulk of my WSTL holdings through purchase of TLTN after the announced merger, because the arbitrage spread stood at nearly 10% for a long time. Legacy TLTN holders who didn't want a 'fast growth' company are long gone (e.g., the liquidation of WSTL shares in 17-15 range, through BARD back in May). TLTN acquisition gave WSTL over $20M of cash, put the convertible bond to bed, and opened other finance options. It also brought under one roof a group of engineers who work on very similar products, probably providing an easy way for WSTL to expand R+D capability in one fell swoop. So it strikes me as an acquisition of 'intellectual capital' as much as physical capital. The TLTN business was high-margin, no-growth; WSTL's total current business for 'telco access products' (TAP) which includes this part (would need to check the financials to estimate the mix of WSTL and TLTN) was flattish last Q, but is projected to bump up by $10M this Q vs last Q. I expect there are other non-CPE products coming down the pike that are being worked on by this collective group of engineers, and this is the direction WSTL needs to go. Just my speculation. As WSTL's DSL-related revenues grow, they will be much closer to a pure play; this proportion of total revs went over 50% last quarter for the first time, and likely to stay well over. Did WSTL overpay a bit for TLTN? Maybe, maybe not. Hard to say how the overhanging converts may have hurt WSTL's need to expand. But dilution is done deal. There is nothing else in the closet, if that is your concern. HTH, Rich

To: Mark[ox5] who wrote (20407)	9/13/2000 5:30:47 PM
From: add	Read Replies (2) \| Respond to of 21342

Mark, Adding to Rich's post, TLTN and WSTL both did some level of traditional T-1 line equipment. In this, they were forecasting substantial savings by merging the operations. Secondly and more importantly, TLTN and WSTL were both developing HDSL2 products which is the replacement for the traditional T-1 lines. It I belive provides for T-3 performance. From the merger announcement, "Teltrend's senior vice president of finance, Douglas Hoffmeyer, told Reuters that the combination is complimentary to the DSL products business because Teltrend focuses on HDSL products, which serves business end-users, while Westell, focuses on ADSL products, which serves residential end-users." They were very exicited about this product group in the last CC and this is were the growth from TLTN was supposed to come from. So, TLTN was supposed to provide revenue ACCELERATION from these products.

To: Mark[ox5] who wrote (20407)	9/13/2000 5:33:51 PM
From: LiPolymer	Read Replies (1) \| Respond to of 21342

Mark[ox5], Perhaps there is little interest in discussing this on the Yahoo! thread because the Teltrend merger is "old news" which was long ago factored into the stock price. If you are really interested, here is some light reading: freedgar.com freedgar.com As Rich pointed out there were a number of positive synergies that came out of the merger. You are free to read the opinions of the investment bankers of both companies (Goldman Sachs was advising Westell). Of course these consultants were paid, but not paid to lie. (Similar to paying auditors to look at the books, they are paid, not paid off.) The Teltrend shares were swapped for 3.3 Westell with no restrictions. Teltrend was a $25-$30 stock before the merger, but at the peak could effectively have been sold for over $130 after the merger went through. Some took the money and ran right away, others held and sold later (big seller through the MM BARD a few months back). There is no secret stash of shares somewhere, most are just part of the float now. As was pointed out on the Yahoo! thread, when former Teltrend holders liquidated their windfall profits it put pressure on the stock similar to what happens when Efficient insiders exercise options and sell on the open market. (Edit: IMHO it is a good thing Westell is not a DSL pure play. Although TAP and CPI are not expected to show hockey stick growth, they are profitable and continue to grow nonetheless.) Good luck in your pursuits, Gary

To: Mark[ox5] who wrote (20407)	9/13/2000 8:50:40 PM
From: Michael F. Donadio	Read Replies (1) \| Respond to of 21342

Mark, I concur with the responses you got from Rich, add, and LiPolymer. If I were to add anything it would be to expand on the significance of WSTL doing more than just DSL, i.e. TAP and CPI. Some see it as a negative because Wall Street does not know how to value it and call it a distraction. Marc Zionts was asked that question at a meeting at a time when the market was dumping on stocks that were 'one trick ponies' and DSL deployment was delayed. Marc said that WSTL had more value than just DSL and he saw this as a plus,-- even if the market is not fully valuing those businesses. The fact that WSTL is into T1s and T3s, and HDSL2 and application service provision (ASPs) of video and audio conferencing gives it an excellent handle on the ramifications of bandwidth entering the home and office. It is in touch with software and hardware engineers to address those portending developments. That is a far cry from a 'screwdriver' company that just follows designs to slap modems together. Capt_Smartjack referenced this is in a post found in YAHOO and that I brought to SI as well, where he explains WHY WSTL modems do not lock up like many others using the SAME chips because of additional logic circuits. The new Webshare software is another example. Clearly Wall Street is most concerned today on who will become the market leader in DSL since it is a source of enormous money and growth and the other businesses seem inconsequential by comparison. Time will answer this question, but I think WSTL has the advantage of knowing the right moves to make because of its prior experience and business relationships, present contracts, and awareness of future developments in DSL. All the best, Michael