W) ELAS – quick and loose
Rated a WATCH
Reason for DD
request
Business
Elastic Networks Inc. designs, develops and markets high-speed digital subscriber line (DSL) communications products, enabling service providers to deliver broadband access solutions over the existing copper telephone wire infrastructure. For the six months ended 6/30/00, revenues totaled $14.7 million, up from $2.6 million. Net loss applicable to Common rose 53% to $13.5 million. Results reflect increased sales of the ELMo 120 DSLAM, offset by higher personnel expenses.
In the first six months of 2000, sales to Nortel Networks accounted for approximately 21% of our total revenues and sales to Westcon accounted for approximately 14% of our total revenues
Competitors
Our most direct competitors include Alcatel USA, Inc., Cisco Systems, Inc., Copper Mountain Networks, Inc., Lucent Technologies Inc., Nokia Corporation, Nortel Networks and Tut Systems, Inc.
News
29-Sep-00 11:00 -- 12:00 ET
Elastic Networks (ELAS) 14 7/8 +1 7/8: DSL products provider opens at $14 1/16 after pricing its IPO at $13; Chase H&Q is the lead underwriter.
29-Sep-00 11:25 ET
Elastic Networks (ELAS) 14 1/8 +1 1/8: -- Update -- IPO opens for trading at $14 1/16. The 7.8 mln share deal was led by Chase H&Q.
Analysts and Other
none
Numbers
Revs $2.2M to $1.1M to $4.4M to $6.1M to $8.5M Jun00
Net Loss $(5.3)M to $(4.0) to $(7.9) to $(5.6) to $(7.5) Jun00
52-Week Low on 6-Oct-2000 $8.00
Recent Price $9.063
52-Week High on 29-Sep-2000 $15.875
Market Capitalization $283.6M
Shares Outstanding 31.3M
Float 6.80M
Price/Book N/A
Price/Earnings N/A
Price/Sales (ttm) 7.44
Debt/Equity (mrq) 0.05
Total Cash (mrq) $9.20M
EBITDA (ttm) -$24.6M
CMTN Price/Sales (ttm) 8.37
Internet Posts of Note
IPO this week at 13 went above 15, now at 8 3/4. Spinoff from NT.
10/6/00 on SI
ELAS is in a sector that is taking a beating right now, xDSL. CMTN down heavily. RAMP just pre-announced tonight. Telcos are widely thought to be cutting capital expenditure programmes.
9/30/00 on SI
Red Herring take: The digital subscriber line market has never lived up to expectations established by early component manufacturers such as Copper Mountain Networks (Nasdaq: CMTN) and Tut Systems (Nasdaq: TUTS), which are off 63 percent and 38 percent, respectively, from their annual highs established just a few months ago. Carrier difficulties implementing DSL over copper wires has slowed adoption, but Elastic's Ethernet-based technology has plug-and-play functionality, making administration much easier, and provides improved performance over existing asynchronous DSL services
9/30/00
Glad to know my batting-average for guessing IPO performance this week has been only marginally-worse than the predictions of "WorldFinanceNet" and most other sites I've checked.
9/29/00 on SI
the mkt cap is very small for a company in this sector...their technology is new and hopefully revolutionary...but more important, they have NT's backing...packet based DSL will be huge imo...btw, NT cannot sell ELAS for at least 6 months even if they wanted to(which i doubt they would want to)...14 is dirt cheap 9/29/00 on SI
Elastic Networks has developed a next generation DSL which combines DSL with Ethernet technology. Called Etherloop, it provides the advantages of DSL while resolving many of its difficulties. Easy to install, it avoids cross talk and can transmit over longer distances. It also dynamically allocates bandwidth to compensate for peak traffic demand. Elastic Networks was formerly a unit of Nortel Networks, which remains a major distributor and a major (46% post IPO) shareholder. The firm introduced its first generation product in 2Q’99 and sells principally through distributors Nortel, Westcom, and Williams Communications. Revenues remain concentrated with three customers accounting for 76% of 6m’00 revenues, with another 15% international. Early end user clients include Bell South, Darwin Networks, CAIS Internet, Prism Communications, and US Online. The firm’s early performance has been marked by substantial revenue growth. However, having only emerged in 2Q’99, performance is limited. In ’99, revenues reached $8.2 million, with a –74% gross margin and a $20.9 million operating loss (adjusted for equity charges). Between 6m’99 and 6m’00, revenues increased 465% to $14.7 million, with a 3.8% gross margin and a $12.6 million operating loss (adjusted for equity charges). The firm’s gross margin improvement has and will continue to follow its manufacturing ramp-up.
9/29/00 on SI
DD on ELAS, it is DSL, it's closest competitor is TUTS, other similar companies are CMTN, EFNT, TSTN. It's revenue growth is huge. About 8 million offering, about 31 million outstanding. B rated IPO.
9/29/00 on SI
Elastic Networks (ELAS) should start trading around noon. It priced at $13, above the range of $10-$12. If anyone wishes a cheaper backdoor to get in they might look at ITE.TO. They are an incubator who hold a bunch of shares at $5.33. 9/29/00 on SI
Insiders
Chart
Steady decline. Seeing block buys but price going down.
Links
Summary
CMTN is profitable (unlike ELAS) and has similar growth rate. ELAS supposedly has a better products, but profitability is the key. Debated on superior technology eventuall y show up as increased market shares and profits. Sector is DSL = Dying So Long so rated a WATCH. NT connection is a very big plus, but tax loss selling may hurt it. Oct. 17 is CMTN earnings. The fate of DSL sector awaits it. This will rise or fall with CMTN.
Jack |
