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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (6663)	10/9/2000 11:55:19 AM
From: Dealer	Respond to of 65232

ELON--Fish or Cut Bait: Echelon connects with investors By Paul R. La Monica Redherring.com, October 09, 2000 Check out the new FOCB Index! EDITED FOR ELON ONLY (dealie) LOOKING AT LONWORLD But as the home networking market grows, Echelon may find itself as a more trendy investment. Mr. Miller says there are two catalysts on the near-term horizon that could have an impact on the stock. On October 18 and 19, Echelon will host its annual LonWorld conference in Orlando, Florida, and he expects several product announcements to come from this event. The company is also set to report third-quarter earnings on October 23. The consensus estimate is for Echelon to break even for the quarter. And in January, the International Consumer Electronics Show could yield some positive buzz about the company as home networking is listed as one of five technologies to watch according to the CES conference Web site. From a financial standpoint, the company looks solid. Echelon has no debt. Gross margins were 63 percent in the second quarter, and the company is continuing to invest a sizable portion of revenue into research and development, approximately 23 percent. Echelon is expected to break even this year and earn 22 cents a share next year. It's tough to call the stock cheap however, trading at about 120 times 2001 earnings estimates. Still, Echelon is much more of a bargain now than it was earlier in the year, when it got caught up in the frenzied environment for tech stocks. At about $27 a share, Echelon is 76 percent off the 52-week high of $111.44 the stock hit in March. That was certainly a ridiculous price for the stock, especially because analysts weren't even expecting the company to be profitable. It was the big Enel contract in June that caused analysts to revise their forecasts. Investors need to keep in mind, though, that the stock will probably continue to be very volatile. I would not suggest that the faint of heart buy Echelon. But there aren't too many companies that are really primed to take major advantage of this market. "Echelon is a dominant player in a market opportunity that is just starting," says John Todd, an analyst with Thomas Weisel Partners. It stands to reason that the best long-term investments in home networking will not be the companies that make all the cool Internet-connected appliances, but rather those networking companies like Echelon, in the same way that companies like Cisco and Juniper Networks (Nasdaq: JNPR) are the biggest benefactors of the explosion in data networking.