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Technology Stocks : Efficient Networks Inc - (Nasdaq- EFNT) -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (462)	9/20/2000 12:00:56 PM
From: Mark[ox5]	Respond to of 675

They are shooting for mid 40% range in a year's time Achieved through VoDSL, changing product mix from residential/business from 70/30 (current) to 50/50, and also value added to their products such as security, VPN, etc So their stinky margins should be much improved, but I believe the market currently views DSL modems as a commodity business and mutiples have contracted immensely on these companies. Sadly, this stock has turned into a cheap play even on a PE ratio if you go 1 year out, and I think the worse thing is when your technology stock is seen as a "value" play rather than a "growth" play... EFNT should be seen as a growth play and some nice Price to Sales ratios of 20,30 ... unfortunately we are no where near that due to fears (in my opinion) of cut throat pricing wars in the next 1-24 months on residential modems.. if the RBOCs, CLECs are giving away modems with the service eventually that trickles down to the suppliers, they are not going to continuously eat that cost forever. (I can see them doing it for a while because of the value added of gaining new subscribers) So I think the problem is the "view" of EFNT on the street of a 25% gross margin commodity product company versus what those who do research in the industry know can be a 45% gross margin, VoDSL, business oriented, value added company which deserves much higher mutiples. The question is will the Street ever recognize this and if so, what will it take, what does the company have to prove going forward ... I dont know how the company expands on 110,130,65% sequential revenue quarters back to back, and a 6% gross margin improvement in 3 months. If the market "rewards" that sort of behavior with a 70% price reduction, what does the Street expect for an encore? I just dont get it anymore. Mark