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Technology Stocks : ANTEC Corp. (ANTC) -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (709)	10/18/2000 4:15:00 PM
From: MikeM54321	Read Replies (1) \| Respond to of 847

Thread- I pulled this analysis off Yahoo. I have not verified it, but the writer seems to have most of the figures correct at first glance only. As I said, I have no idea of it's accuracy, but it's the only thoughtful post on Yahoo today. That in itself should be reason enough to repost here.<g> Strategically it seems to make sense to me too. And I'm also puzzled as to why NT just didn't purchase ANTC outright. That would have made even more sense from the NT perspective. NT said it was because NT wants to focus on what they do best and it's not HFC access. -MikeM(From Florida) ****************************** Thoughts post news release by: swakinmichigan No question 3rd qtr was a disappointment. Mgt acknowledged as much on the conference call. Why didn't they warn? I don't know and have posited the question to investor relations. They have lost credibility with me by not warning. In addition, having to wait 2 weeks for guidance on future earnings only makes matters worse because of the uncertainty (but more on that later). As for this perceived scheme to distract us from the true numbers of ANTC, I think those of you that have reached this conclusion are wrong. Characterize me as delusional, but I believe it makes good strategic sense and allows both ANTC and NT to realize/unlock the value in Arris. Essentially, they are taking a privately held company that is buried under both corporate structures and spinning it out (like an IPO) without it being an IPO. This puts ANTC and Arris together, which is probably where they belong. Why doesn't NT just acquire both companies? Maybe because they see that the market isn't properly valuing Arris now and wouldn't do it with ANTC either. Looking further at the deal, which is comprised of $325mm cash and 33mm shares of stock in ANTC. While ANTC is @ $12 per share, Arris becomes valued at $890mm. Then, when you consider that total consideration paid to NT is $621mm for a 46.5% stake in ANTC, ANTC is valued at $1.335b or $18.836 per share. There is a disconnect in the market right now. If the shares that NT receives have a mkt value of $22 (20x low end of '01 earnings), then the new ANTC becomes valued at $31.875 per share. Does any of this make a difference? Sure, let's take a look at the market for the new company. Right now ANTC and Arris have a combined 70% market share of a market that last year was $293mm. That market is expected to be $7b by 2004. That's 88.645% per year growth rate for that market. Let's say that the new company gets only 40% of that market in 2004. The new company's actual growth rate for the products and services would be 68.67%, annualized. Essentially, they would go from $205mm to $2.8b. Now let's consider forecasted earnings (or what we know at this point because details are being witheld for 2 weeks) and the growth rate of the company as a whole. '01 has a range of $1.10 - $1.20. These are solid earnings even when you allow for mgt's misleading comment that this is accretive (because it's only accretive to old ANTC's revised downward #s for '01). If, hypothetically, the overall company has a growth rate of 50% for earnings, we go from 1.10 in '01 to 5.56 in '04. Discount that stream of earnings for the next 5 years, and we have $11.28 per share of earnings. What would you pay for that income stream? That's for you to decide, but consider this: if the new company grows at only 15% after '04 and discounted earnings for '04 are $3.96 based on my above analysis, then the stock is worth $59.40 now if you apply a PEG of 1. Don't get me wrong...I don't think the stock's worth that much now. They're going to have to prove they can manage the growth, maintain market leadership, and attain the 40% in '04. However, the stock is worth more than $12. The market is fickle and doesn't reward long-term thinking. I find the strategy very intriguing. We'll see if they can execute. Shorts - you won on this day. Longs (I'm in at $31 on a weighted average basis) - we'll be back. Editorial: Kindly keep the name calling off the board. It'd be nice to see some cogent thinking and commentary and not the verbal jousting that has occurred recently.