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

To: Herschel Rubin who wrote (1)	12/2/2000 9:34:57 PM
From: mike cobble	Read Replies (1) \| Respond to of 3

Herschel, excellent audio. With the current stock price valuation it just proves that many people don't understand this company. Yes, earnings are in the red due to company acquisitions (3, 2 of which are software) and amortization. Highlights: 1. Lots of cash, book value $17.7 2. 5 year growth rate 40% 3. Margins continue to increase sequentially and will continue so, up to 33% from 27% recently. 4. Revenue growth minimum 20% sequentially. Q4 to Q1 were expecting 20-25%, came in 26%. 5. This would put revs for 2001 (june) around $675 mil 6. They currently see themselves with 1% world market penetration. 7. 80% of THEIR market is ILEC/PTT business the TRUE profitable DSL business as opposed to CMTN, NPNT, RTHM, COVD, the losing DSL business based on CLEC's. BIG POINT which many people obviously don't understand!!!!! 8. Customers from above would be SBC, VZ, BS, BT, DT, WC, Sprint, Korean and other foreigns. 9. 20% of their business is CLEC of which COVD only compromises 15%. They do not see COVD changing orders and furthermore, plenty other companies want products. 10. Diversification: previous quarter to this quarter saw 3 largest customers move from 72% of rev to 54% of rev with 26% sequential growth. Interestingly COVD was one of these companies - didn't hurt EFNT in the least. You can see how EFNT is quite insulated against CLEC troubles. 11. They have no Direct exposure with ISP's except AOL. All other ISP's comarket. They have no $$ exposure/risk. And, if you asked me, I wouldn't mind having direct exposure to AOL in the least, in fact owning that stock..... 12. 70% of biz is residential currently and 30% small and medium business. The latter market is where the money is and that is their business focus. VoDSL will start moving heavily June quarter. 13. DSL is a software biz and that's how EFNT sees it. 14. Focusing on value added services. 15. Q4 00 the eps was (.03) with consensus being (.15) and recent Q1 01 eps .10 with consensus .01. They have hammered the consensus on both accounts. These numbers show me a well managed company with huge growth. They see next quarter being .11, uncertain how they will weigh in other than the fact the expect rev ~ 150Mil 16. Kaufman, WR Hambrecht, Morgan Stanley DW, CSFB with price targets ranging $65-175. I think $30-60 looks pretty good near term......... I think points 7-11 aren't understood by most people and many of the other points also. THESE are big issues people need to understand to fully value this company and even the professional investment community understands them poorly or at least is taking advantage of the confusion. DO YOU HAVE ANYTHING YOU WOULD LIKE TO ADD? ALSO, in which quarter will the amortization and acquisition costs end? It appears this would be near end 01 (6) or early 02 (latter 1/2 of 2001)