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Technology Stocks : Stratos Lightwave, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Secret_Agent_Man who wrote (365)	9/25/2000 7:52:58 PM
From: Secret_Agent_Man	Read Replies (1) \| Respond to of 393

Stratos Lightwave (STLW, 35.28, NAS) develops, manufactures and sells optical subsystems and components, with a blue chip client list. You may have never heard of it because it only had its IPO 3 months ago, but Stratos is a leading supplier of components - transceivers, connectors and cable assemblies - for high data rate networking, data storage, and telecommunications applications for local area networks (LANs), storage area networks (SANs) metropolitan area networks (MANs) wide area networks (WANs) and central office networking in the telecom markets. STLW's growth in optical subsystems is driven by increasing demand in the Gigabit Ethernet, Fibre Channel, and Metro markets for their embedded and pluggable transceivers, in a variety of wavelengths and form factors. These are then incorporated into the optical networking products of companies such as Nortel (27% of sales), Cisco (10%), Alcatel (6%), Agilent, and Lucent. Stratos' subsystems consist of optical transceivers that act as go-betweens, translating and transmitting signals between optical and electronic networks. Diversified components maker Methode Electronics owns 85% of the company. The company expects to be completely spun off from Methode Electronics (METHA) in the early part of 2001, subject to receipt of the IRS ruling. Orders and shipments are growing for their optical components products, resulting from the refocus toward more complex, highly engineered OEM product programs, including optical backplane connectors and single mode cable assemblies. The company expects to grow its top line at the 90-100% growth rate. For its first fiscal quarter ended July 31, 2000 - its first as an independent company - the company reported record sales for both its optical subsystems and optical components, as well as record profits. Sales increased by 78% to $25.9M from $14.6M, and up 12% sequentially from Q4 ended April 30, 2000. Operating expenses declined slightly to 25.7%, with sales and marketing expenses declining as a percentage of sales. Total backlog as of July 31 also increased 88% to $47M. Net Income reached a record $2M or 4c per share, an increase of 38% from $1.5M or 3c per share for the same period last year, and up 86% from $1.1M or 2c a share for Q4 of fiscal 2000. In the IPO, STLW sold 10M shares of common at $21 per share, resulting in net proceeds to the company of $195M. Uses of proceeds to date included general corporate purposes, a payment of $3.0M to Rockledge Microelectronics for part of the purchase price of the Stratos Lightwave - Florida subsidiary and repayment of $2.7M in advances from a Methode subsidiary. Demand is continuing across all product lines, including both optical subsystems and optical components, and STLW is ramping up its manufacturing capacity, particularly at the Chicago Optoelectronics and Fiber Optics groups facilities. STLW is on track to increase the transceiver capacity by 50% by the end of October and 100% total increase in unit capacity by the end of calendar 2000. Stratos is being covered by six analysts: three strong buy and three buy ratings. The consensus for the analysts who follow the stock is only 20c a share for next year, but this group is not yet trading on its earnings. The IPO lockup expires on Dec.23, and the current float is only 8.75M shares. Something important to know, as you make your investment decision: the current amount of shares sold short is 5 million shares - that's 57% of the current float. There is no question that there are strong signs of a short squeeze about to happen. The stock of STLW is trading in an area of strong support, after pulling back from a failed third attempt to break past 51. Over the 3 month trading history, there is now a series of rising bottoms, with the year's low of 26 being set in the first week of trading. Friday's trading indicates a likely reversal, which should lead to a successful run to 51 and past it. We like this stock a lot for a longer term investment. This newsletter has received no compensation whatsoever from STLW. alertinvestor.com