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To: Wes Stevens who wrote (31285)	2/5/2001 2:13:33 PM
From: ayahuasca	Read Replies (1) \| Respond to of 49816

bless you.

To: Wes Stevens who wrote (31285)	2/5/2001 2:52:00 PM
From: ayahuasca	Read Replies (1) \| Respond to of 49816

For those interested in SCMR- Company Note Sycamore Networks Epoch Partners FEBRUARY 5, 2001 NASDAQ:SCMR Seth Spalding Richard Shannon Ashwin Navin CALL TO ACTION: SYCAMORE AND ONI SYSTEMS _______________________________________________________________________________ FUNDAMENTALS Price (02/05/01) $29.25 FY Ends Jul 2000 2001 2002 NASDAQ Comp (02/05/01) 2,660 Revenue(MM) $198.2 $583.4 $892.2 Prev Est.(MM) NC NC NC 52-Week Range $26.75-199.50 EPS Shares Outstanding(MM) 244.9 Q1 ($0.02)A $0.05A $0.07E Market Cap(MM) $7,164 Q2 $0.01A $0.05E $0.08E Q3 $0.05A $0.06E $0.08E Avg Daily Vol(3Mo.)(000s) NM Q4 $0.08A $0.06E $0.09E Fiscal Year $0.15A $0.23E $0.32E Previous Est. $0.15 $0.23 $0.32 P/E NM NM 91.4x Source: Epoch Partners _______________________________________________________________________________ * The sinking price of Sycamore Networks (NASDAQ:SCMR) with a simultaneous run-up in shares of ONI Systems(a) (NASDAQ:ONIS) has afforded aggressive investors a pair-trade opportunity. * The companies have similar market caps at the moment, but vastly different addressable markets. * If ONIS attained 100% market share in its 2004 addressable market, SCMR would only need 5% market share to exceed ONIS' revenue in that year. * Full coverage of Sycamore and the optical equipment sector is available free at: epoch.com _______________________________________________________________________________ Call to Action: Sycamore and ONI Systems The sinking price of Sycamore Networks with a simultaneous run-up in shares of ONI Systems(a) has afforded aggressive investors a pair-trade opportunity. The two rapidly growing companies possess strong management teams and industry-leading technology in their respective sectors. However, their nearly identical market caps do not reflect the vast disparity in the size of their addressable markets. Considering RHK's North American estimates alone, Sycamore will compete in the long haul WDM market ($24.3 billion in 2004), optical cross-connect market ($5 billion in 2004), and metro core WDM market ($1.5 billion in 2004), for a sum addressable market of $30.8 billion in 2004. ONI Systems, currently only participating in the metro core, faces a total addressable market of $1.5 billion in 2004. Market Share This begs the question of what each company's market share could be in 2004? We're not trying to be fortune-tellers, but if ONI grabbed 100% market share, Sycamore could exceed ONI's revenue in 2004 with only 5% market share -- an easily attained target for a company with Sycamore's momentum. The table below gives investors an idea of the current trading environment. Timing This trade does not come without its uncertainty, as we do believe that ONI has a “bullet proof” solution for the metro space based on our carrier interviews. As such, it is expected to beat forecasts for the coming quarter, though we believe this is accounted for in the recent run-up in the stock. Meanwhile, we recently trimmed estimates for SCMR, and other analysts may well follow. Thus, while we believe this trade is fundamentally sound, near- term momentum may move against us. Our trading call may require some patience, and should only be approached by investors with tolerance for a high degree of volatility. 2001E Revenue Multiple (as of 2/2/01) Company / Mkt. Cap. / Multiple Avici Systems / $1,662.3 / 18.6x Ciena / 23,788.6 / 14.0x Corvis / 6,779.8 / 20.8x Juniper Networks / 31,974.1 / 18.9x ONI Systems / 7,025.3 / 39.0x Sycamore Networks / 7,978.4 / 11.2x _______________________________________________________________________________ COMPANY PROFILE Sycamore Networks sells systems that transport and direct information over fiber optic networks. Its optical hardware and management systems allow facilities-based service providers to expand the capacity and flexibility of their networks for the insurgence of data traffic.