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

To: P314159d who wrote (20460)	9/20/2000 10:14:47 AM
From: Rainmaker	Read Replies (1) \| Respond to of 21342

GSCO bot and sold PAIR through the low teens until ADCT acquired PAIR several months later. ALA a possible suitor?

To: P314159d who wrote (20460)	9/20/2000 11:49:13 PM
From: Michael F. Donadio	Read Replies (2) \| Respond to of 21342

Highlights from Analyst Report of Sept. 13, 2000 Pi, This is a good read from our long term analyst Joel Achramowicz who is now with a new research group. He seems to agree with you Pi. ================================================================================================== media.corporate-ir.net Pennsylvania Merchant Group Equity Research ---- September 13, 2000 Joel W. Achramowicz Initiating Coverage Of This DSL Equipment Supplier With a BUY Rating and a $36 Price Target, Expect Quarter To Be on Track Despite Concerns; BUY Summary and Recommendation ... WSTL grew its CPE ADSL revenues by 255% and 282% in Q4 (March) and Q1 (June) respectively, while turning in its first quarter of profitability (excluding one time items), and we believe the ramp is only beginning. WSTL has done a credible job of diversifying its customer base, lowering its cost structure and increasing capacity through outsourcing—all of which bode well for the stock. ... We believe the market is ignoring the value inherent in WSTL’s significant franchise: twenty-plus years in business and a blue chip customer base including all the major domestic ILEC and international customers such as British Telecom and others. Simply put, the fundamentals have never looked better, and investors have a golden opportunity to participate in the rapidly growing broadband access market with limited downside risk in our view because of the company’s portfolio of businesses. Although concerns have surfaced that WSTL may miss its September quarter numbers, we believe the market has discounted WSTL stock excessively, thus mitigating downside risk at these prices. Additionally, we think there is a good chance the company will meet our Q2 estimates, which call for $120 million in revenues and EPS of $0.08 (excluding one time items). We are therefore comfortable with our aggressive rating, and strongly recommend clients use this temporary weakness to initiate positions. Huge Valuation Disparity We continue to be perplexed by how inefficiently the Market has valued WSTL relative to its nearest competitor Efficient Networks (EFNT). WSTL carries a price to sales ratio of 5.1 times trailing twelve-month (ttm) revenues of $205.8 million versus 15.3 times ttm sales of $202.2 million for EFNT. In our view, EFNT is being valued as a pure play DSL stock, while WSTL is being unfairly discounted for its non-DSL businesses, which offer diversity to offset the volatility of the ADSL sector. ... In addition, sales in WSTL’s services business – Conference Plus (CPI) subsidiary – have been growing consistently at 50%, over the last three years, and we believe steady increases in Web based services and applications represent CPI’s future growth. We believe the conferencing business alone could garner a $1 billion valuation, in a public offering, providing WSTL with a significant asset. We expect management to maximize CPI’s value through an IPO to be completed in a tax-free distribution to shareholders in time. Such an offering could provide a catalyst for WSTL shares, in our view. ... On the heels of strong sales and an improved gross margin, WSTL turned in its first quarter of profitability with EPS of $0.06 (excluding one-time items), $0.04 ahead of consensus estimates. We believe that this upside surprise is only the beginning, as we note that cost reduction and higher gross margin were directly attributable to higher volumes, and optimal absorption of overhead. A recent Dell’Oro report confirmed our belief that WSTL is gaining share from incumbents in the ADSL CPE market, and is positioning itself very well to take advantage of an explosive market opportunity. In our view, WSTL is operating with a much leaner business model, and is poised to gain considerable earnings leverage, as all three business segments boast profitable earnings. ... ================================================================================================== I don't know how much longer WSTL will be at these bargain prices. GS keeps buying and sitting on the ask according to the yahoo thread. All the best, Michael