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Technology Stocks : Oclaro, Inc. (Avanex-Bookham) -- Ignore unavailable to you. Want to Upgrade?

To: Shaw who wrote (1191)	11/29/2000 10:31:24 AM
From: Techplayer	Read Replies (1) \| Respond to of 2293

Shaw, I stepped into the market for about a 30% stake today. CIEN at 70.5, AVNX at 53, scmr at 45.75, WFII at 28, MRVC at 16 and JDSU at 57. I left room for averaging down and some of these may be short lived in my portfolio. tp

To: Shaw who wrote (1191)	11/29/2000 3:11:49 PM
From: Raymond Duray	Respond to of 2293

Hi Shaw, I really can't tell you when AVNX will bottom out. I can only suggest that this is not it. I suspect sometime in the Feb.-March timeframe will be the point at which the Fed will drop the Fed Funds rate. That's the time to go long. We will most likely see a sucker rally starting the day that Gore concedes. Beware that professionals will use this as an opportunity to dump shares on the naive public. The rally will be short-lived, IMO. Best, Ray

To: Shaw who wrote (1191)	11/29/2000 7:30:43 PM
From: tinkershaw	Read Replies (1) \| Respond to of 2293

Any input on what constitutes a reasonable share value, would be appreciated, as I plan to add to my small Avanex holding, at some point. Based on present value analysis, giving AVNX a 50 multiple in year 5 and assuming a 100% revenue CAGR over the next 5 years (front-loaded and in lock step with the BRCM's, CSCOs, JNPRs of the world) with a terminal net margin of 20% and a discount rate of 19.5% (which is 1% higher than Epoch gives Phone.com (yeah now known as OpenWave) and 8% per annum dilution in shares I get a fair present value of $160. So it seems to me that any price around here is a great deal, just a matter of confirming the sustainable advantage and growth of this company and then picking your entry point. Tinker P.S. This method is the preferred method of Epoch Partners for valuating companies like AVNX. I prefer discounted cash flow where possible, but it is darn tough with a company like AVNX to get there with any degree of confidence. P.P.S. Regardless of how close this PV is to what others think, I think it at least amptly demonstrates that the long-term valuation of this company is much greater than its current valuation. It is just a matter of coming to grips with the strength or lack thereof of this companies fundamentals.

To: Shaw who wrote (1191)	11/29/2000 11:23:11 PM
From: Thomas Tam	Read Replies (1) \| Respond to of 2293

Okay, I'll take a shot at it. I would use a P/S ratio of 10:1 (just picked that number out of thin air). So if AVNX sells 200 million this year then the share price would be around $30. (Not a prediction, just a valuation metric to justify a buy). From a P/E ratio, (people will argue that PEG is more indicative) of say 50-60, if you say that the margins are in the range of 20% (excluding goodwill and other charges), then on 200 million in sales, this leads to 40 million in earnings which would translate to 61 cents per share. This would equate to a share price of $30-36. One problem I see with the current expectations in optical is that for sales to grow in a capex slowdown, components have to be cheaper. (See the Motley Fool piece on this, very insightful, I think). This will drag down overall sales, but the amount of components sold will increase. Question is can increased sales counteract the effects of declining component prices? This is a matter of execution. AVNX shouldn't have a problem with their discontinuous innovation (Agree with you tinkershaw) being marginalized. However, not enough of a tornado in this specific niche yet. JDSU is the prime example here, they are increasing capacity to hopefully reduce the unit cost of the components, and if executed then the reduced sale price of components can be somewhat mitigated. Don't know if AVNX will hit the $30s, but would be willing to say that the risk/reward is more favorable at that price. Don't know what is going to happen with the blowup in GTW and ALTR. Should present an opportunity for at least a trade and possible a very good long term entry. Later