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Technology Stocks : Sycamore Networks Inc-(SCMR) -- Ignore unavailable to you. Want to Upgrade?

To: bob zagorin who wrote (1881)	2/14/2001 3:08:45 PM
From: ahhaha	Read Replies (1) \| Respond to of 2249

I agree with the little he said about JDSU.

To: bob zagorin who wrote (1881)	2/14/2001 7:38:53 PM
From: Maverick	Respond to of 2249

Highlights from Q2 conference call by: lakers_w 02/14/01 07:37 pm EST Msg: 47673 of 47673 Highlights from Q2 conference call Positive: - revenues of $149.2M were up 414% vs year ago and 24% sequentially. - shipped products to 14 service providers and 1 international distributor. - Williams represented ~50% of revs. Grew in absolute terms, but declined from less than 60% in Q1. Expects Williams to drop below 50% in coming quarters. - had two other customers that represented 10% of total rev. These two were different from the two 10% customers in Q1. - book-to-bill remained greater than 1. - expects operating expenses as percent of rev to decrease in Q3 by 2-3% points from Q2 and to decrease in Q4 an additional 3-4% points from Q3. Neutral: - inventory turns were 4.8, unchanged from Q1. - will extend vendor financing of up to $100M each to CoreExpress and Storm Telecomm. Has not yet recognized rev from VF and current draw-down is ~$50M. The company believes it is being conservative in its selection of VF customers and does not expect VF to exceed $250M in either FY01 or FY02. - gross margins were 47%, unchanged from previous quarters. R&D expenses were 28% of revenue, down from 29%. - left guidance for FY01 rev growth unchanged at 205%-210% over FY00. This represents a decrease in sequential growth rate vs previous quarters. - left guidance for FY01 earnings unchanged at $0.21 - $.24. First Call consensus is $.22. Miscellaneous: - SN8000 continued to represent majority of rev, with the SN6000 contributing modestly and SN16000 increasing to more than 5% of rev in Q2. Expects roughly same mix for full year '01 with the SN1600 increasing to 10-15% and the SN10000 contributing modestly for the first time. Began shipping SN3000 edge product, with deferred rev to be recognized in Q3 and now sees upside potential for the edge products of as much as twice of the company's original estimate. - ended quarter with $1.4B in cash and cash equivalents, down $81M from Q1. - CFO said "just like a hot bowl of oatmeal, our revenues offer alot of FIBER, but they're also very 'LUMPY'" :o)

To: bob zagorin who wrote (1881)	2/14/2001 9:40:18 PM
From: Maverick	Respond to of 2249

SCMR Business Developments Excerpts from Epoch 2/13/01 The SN16000 is undergoing a major upgrade that would take Sycamore to the front of its class in optical switching. The new 16000, available in early spring contingent on VCSEL and ASIC availability, will feature 512 x 512 port density with sub-wavelength granularity (down to STS-1). This could jumpstart Sycamore in a business critical to next-generation optical networking. Pricing should be comparable to the company's existing 64 x 64 switch, but margins will be above the corporate average. The switch is in trials with well-recognized post, telephone and telegraphs (PTTs) and international exchange carriers (IXCs). The SN10000 long-haul and ultra-long-haul platform will ship in modest quantities by the end of FY01. In FY02 however, the SN10000 could potentially exceed shipments of the SN8000, which makes up the majority of revenue today. In addition to long-haul applicability, the SN8000 is an option in the metro core with industry-leading channel count and transmission distance flexibility. However, the product has failed to gain traction in that market, with contracts going to competitors Nortel, Ciena and ONI Systems at Sycamore's expense. This momentum away from Sycamore's metro product is a near-term phenomenon in our opinion, and as networks continue to evolve towards mesh topologies, Sycamore's SN8000 should establish more traction in the metro core. Optical edge devices, the SN3000 and 4000, are seeing a faster than expected revenue ramp, and could give Sycamore upside in 3Q and 4Q of this fiscal year. We are concerned that margins for these products (particularly the 3000) are well below the corporate average (already factored into new margin guidance), due to intense competition from Cisco, Redback, and potentially Ciena in the metro segment. Headcount grew by 167 in 2Q to 1,071 (about 50% of which are in research and development, and 33% in sales, marketing, and support). Despite a falling stock price, Sycamore appears to effectively recruit and retain employees. Our Recommendation The 2Q01 results put to rest several negative factors that have dragged the stock down in recent weeks, so the stock should trade up following this earnings release. Specifically, though visibility is not good, guidance did not come down as was anticipated. In addition, concerns relative to Sycamore's technology position were largely put to rest based on accelerated deployment of the SN3000 and 4000. Consistent with our call to action made on Feb. 5, Sycamore is still attractively valued relative to peers (see table below). Companies with much smaller addressable markets trade at a stark premium to SCMR, and continue to be fundamentally good candidates for pair trading opportunities in our view. CY 2001E Revenue Multiple (as of 2/13/01) Company Market Cap. ($Mil.) CY01E Multiple CY00-01E Rev. Growth Avici Systems 999.8 11.2x 461.6% Ciena 20,691.2 12.2x 74.3% Corvis 5,298.7 16.2x 373.9% Juniper Networks 25,047.4 14.8x 151.8% ONI Systems 5,386.4 23.4x 285.3% Sycamore Networks 6,154.3 7.8x 112.8% Mean 14.3x 243.3% Source: Epoch Partners