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Technology Stocks : Stratex Networks, Inc. (STXN) -- Ignore unavailable to you. Want to Upgrade?

To: Richard Knox who wrote (1237)	12/28/2000 11:34:50 AM
From: Rob Preuss	Read Replies (2) \| Respond to of 1762

Hi Richard, I too am very bullish on STXN. The present price is very low and I expect strong movement to the upside over the next few months. STXN will have no trouble meeting or exceeding street expectations on revenue and earnings... they've had record orders for the past two quarters and I believe that their parts shortage issues are behind them. I also expect them to have strong (although, perhaps, not record) orders again this quarter... if there's any minor cause for worry, its only that street expectations for orders may be overblown and, if STXN doesn't meet such overblown expectations, the street might (incorrectly) interpret this as a slowdown in STXN's market. STXN management has repeatedly stated that their order-flow is lumpy so that low (or high) orders in one quarter do not imply that orders will be similarly low (or high) in the next quarter... one needs to look at the order flow averaged over 3 or 4 quarters to get a true picture of the trend. But I expect that the current market mood will lift in January (especially when the Fed lowers rates) and that the price of STXN will lift with it. Looking forward, we have some exciting new ultra-high capacity products that will be introduced in late March... I expect STXN to roll these out over a range of frequencies very quickly. Initially, customers will pick them up only in limited numbers for test and evaluation... but, by the end of CY01, I expect them to be shipping in significant quantities so they are making a material impact on the bottom line. The demand for these new products (and the current Altium products) is expected to grow strongly over the next year or two: companies such as Nokia expect to be selling 3G handsets in volume starting in late CY02 and that won't happen until the service providers are ready to sell 3G services... so I look for service providers to have their networks ready by Q3 or Q4 CY02... so I expect these service providers to buy & install 3G infrastructure equipment (from STXN, among others) late in CY01 and during the first half of CY02. Once again, STXN is poised with hot new products ready to "catch the wave". NTRO has never been a strong company. Their management made a good decision to grab some cash (through a stock offering) when their stock price was high... and they've done a great job putting out press releases that really sell the company and its potential to investors... and their P-MP product is pretty good too. But NTRO is faced with lots of competition in the P-MP market... and, although the P-MP market is growing, its still quite small compared to the P-P market. So I expect it will be some time before they can increase their top line enough to put their bottom line solidly in the black... in the interim, they need to keep their new product pipeline filled with ever-more-capable and lower-cost products... fortunately, they have a horde of cash and do not need to beg for more from the capital markets. Because NTRO is currently trading at a price which is VERY close to the amount of cash/share they have on hand... and because they have a horde of cash... they have a good chance to survive and prosper - so their shares may be a buy right now. But I don't see NTRO as serious competition to STXN. For one thing, they're in fairly different markets... STXN sells some lower-capacity P-P products that compete with NTRO and STXN has an investment in Ensemble Communications (which does directly compete with NTRO) but that's it. For another thing, STXN has much larger manufacturing, distribution, and sales capacity than NTRO... even with NTRO's much-vaunted strategic alliances, they do not have the market penetration and worldwide presence that STXN has. PCOM is in a pickle. Its good to see that they pre-announced to the upside: it points out that wireless infrastructure equipment manufacturers (like STXN) are not suffering a market slowdown... their customers have access to the $$$ needed to build out their networks and these customers cannot afford to slow down their buildout: if they snooze they lose. But PCOM has a weak/inferior line of P-P products and they were way too early to market with their P-MP product. They're managing to tread water thanks to their alliance with Siemens but they need to keep spending on R&D to come out with better-quality P-MP products... and where will they get the money they need to do all this spending? If they had better management, I'd have more hope for them to improve their prospects... but if they had better management, their current prospects wouldn't be as bleak as they are now. I expect PCOM to continue to tread water... if they're lucky, they'll find someone to buy them (but I doubt anyone is interested, unless its at a fire sale price). I don't think PCOM is a good investment; it is certainly no serious competition to STXN. Rob