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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: Jack Hartmann who wrote (851)	1/20/2001 1:32:43 AM
From: Bilow	Respond to of 24758

Hi Jack Hartmann; Re: "I would think that the JNPR margins would erode as a sign that it is happening." JNPR margins will not just erode, they will collapse. But that, as far as an indicator goes, is a bit late, stocks generally drop before the bad news gets out. JNPR is selling at what multiple? Yahoo shows 71 x annual sales, there is plenty of room for a severe (i.e. 95%) drop, which could still leave the stock much more expensive than the rest of the industry. The early warning indicators are a lot more obvious to design engineers. It seems like every chip company on the planet has all their FAEs out selling chips for rolling your own routers, switches and c. Two companies to look at are Intel and Broadcom. This is not my particular area of specialty, but the coming collapse in internet connectivity costs is fairly well known through the industry. Here's a couple of links to search for information on new parts: Broadcom Corporation is the leading provider of highly integrated silicon solutions that enable broadband digital transmission of voice, video, and data. broadcom.com developer.intel.com Also, vitesse.com is a great source for parts, but the complicated parts of a router are the stuff that Broadcom is shipping, and those are the portions that kept most companies out of the router business. I.e. the software and relatively high level stuff. The barriers to entry in that area are rapidly falling. By listing Broadcom and Intel's networking solutions I do not mean to suggest that those companies will be competitors to CSCO and JNPR, but instead to note that the chips sold by Broadcom and Intel are available to a lot of companies, (not just Lucent and Nortel) and it is the wide availability of those chips that constitutes the falling barrier to entry. The market that Juniper serves is incredibly attractive, with very high profit margins. The overall result will be similar to what happened to the supercomputer industry when VLSI hit it - most of the companies went out of business, and the remaining ones were squeezed into much tighter, less profitable form. -- Carl