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

To: ahhaha who wrote (1292)	2/27/2001 4:57:30 PM
From: Kerry Lee	Read Replies (2) \| Respond to of 24758

Message 15242256 To:Kerry Lee who wrote (1525) From: ahhaha Thursday, Jan 25, 2001 1:10 AM View Replies (2) \| Respond to of 1654 I tend to agree that one has to be defensive making the possibly unwarranted assumption that the shares will drop back to the 40s. With respect to your points: 1) the company has a "hot/proprietary" technology BUT can it be productized on a national/worldwide scale? Yes, and not an issue. I kept hearing words like "pilot plant", starting the "ramp", looking to "outsource" to "improve margins". This is what should be heard in this phase of development. Usually companies do not sustain abnormally high market valuations when their gross margins are below 55-60%. Normally a "hot" technology is associated with very high gross margins. I don't agree. There is no necessary connection between margins and growth rate. High margins don't assure growth visibility. Margins are intrinsic to the nature of a business. The only thing management can do is try to improve margins at the margin. Margin improvement is earnings leverage and is a good way to judge management. Perhaps you mean that margins are inversely proportional to number of competitors. 2) the company appears to be in "transition" from the lab to the "real world". The company is selling product and developing very impressive products for the future. Will it work?? Will any company significantly succeed? I would be concerned that the founder has handed over the reins to a new president/ coo , who by the way took Greg Reyes' place on AVNX board of directors. I looked at Greg Reyes involvement on the BOD as a plus for AVNX as he has proven himself to be a hugely successful executive in turning around Brocade and creating humongous shareholder value for BRCD shareholders. Now that Greg Reyes is no longer on the AVNX BOD, I myself have less confidence in their near term outlook. Companies are greater than the sum of their personnel. People come and go but the company abides if it has something worthwhile. KO didn't miss John Sculley and vice versa. 3) The near term outlook for fiber optics/telco capital spending is ????? You can't bunch it all together and make any valid claim. Old technologies are dying and new ones are accelerating in demand. If AVNX can stay ahead of the curve, then they will be accelerating. 4) $4.3 billion market cap on a $200 million annual run rate on revenues with 47% gross margins ( LOW margins )Long term could be a huge winner BUT given the above, is it possible to buy AVNX a little cheaper, ie 45-55 range? My best guess is that AVNX returns to a trading range of 45 - 75 ( extreme volatility due to low float ) until AVNX provides a more bullish outlook/numbers. By the time the company achieved the bullish outlook you imply it would be selling at a price much higher. After the last 5 years you shouldn't be surprised to see large caps on little revenue. The critical point is visibility of technology. It's almost a sure thing that mega lambdas will be the transmission technique of the future. Put that on a mesh topology AON with mostly passive components and no switches or at least bus juncture light speed switches (holograms?) and you have one-to-many-to-one which is the holy grail of communication.