Tom, not sure if you read this from Steve Harmon about CORV:
> _______________________________
> Steve Harmon's
> H I G H V E L O C I T Y
>
> _________highvelo.com__________
>
> Corvis, Geek Love & Cash
>
> Since 1995 when Microsoft launched Windows 95 and put an arrow through
> Apple's core anecdotal evidence said that products that were "just good
> enough" (Windows) could beat products that were "the best" (Apple's
> operating system).
>
> So when a company such as optical gee-whiz kid Corvis (CORV), which we
> own shares in, comes alone excuse us for not breaking out the champagne
> or fizzy apple juice.
>
> Even the Kool-Aid is gone. And the Nike's left with the Hale Bopp Comet
> some time ago. (Sightings re-appeared last April soaring through Wall
> Street when the comet knocked a crater in NASDAQ that many tourists are
> still peering at for its depth and breadth).
>
> For those of you new to Corvis, Corvis makes optical networking
> equipment that sends voice or data 1,984 miles before it needs to be
> amplified.
>
> While it is not profitable and high risk, we like it for two reasons: it
> can save telecom carriers money and it has more cash per share than its
> current trading value.
>
> On the efficiency front, Corvis sends data about five times better than
> the current solutions, according to industry reports.
>
> Thought of another way, Corvis is like a truck sent cross country on one
> tank of gas while other trucks need five tanks to do the same trip.
>
> Squeezing efficiency out of sending data and networks is compelling to
> us in that it ultimately could save telecom carriers massive amounts of
> capital at a time when they need to plan, build and buy better networks
> than the archaic kluge in place today. Parts of the phone network in
> operation today hail from the pre-automobile era.
>
> Corvis CEO David Huber boasts phone companies can save up to 90% of the
> cost of operating networks by using Corvis gear. Global carriers have
> started buying, albeit in small ways. July 26 Corvis announced an
> agreement with Telefónica to link Spain and Mallorca.
>
> Telefónica operates in 48 countries on all five continents. At the end
> of March 2001, Telefónica reported 66.9 million managed customers for
> its fixed and mobile telephony and Pay-TV (71.3 million total
> customers).
>
> Two carriers already use Corvis solutions, Broadwing (BRW) and Williams
> (WCG). Broadwing has deployed an all-optical network, one of the first
> in the U.S.
>
> Corvis has announced that QWEST (Q) will use Corvis solutions to deploy
> a nationwide express network in the U.S. and collaborate on OC-768
> next-generation products. But rather than invest in carriers we prefer
> the 'arms' merchant,' a company that can sell to everyone. In this case,
> Corvis.
>
> Yet the technology and few customer wins aren't enough on their own to
> get our interest in Corvis. Corvis' cash pile is. Let's see the latest,
> greatest numbers:
>
> ---
> Corvis CORV
> 347.91 shares outstanding
> $2.60 share price (Aug 17, 2001)
> $904.56 market capitalization
> $149.05 rev. to June '01
> $298.09 annualized
> $1,043.28 current assets
> $123.97 current liabilities
> $919.31 working capital
> $(14.75) enterprise value
> $2.64 working capital per share
>
> (all numbers in millions except per share and multiple)
> ---
>
> Using its latest quarterly report, Corvis reports $919 million working
> capital (current assets minus current liabilities). Corvis shares
> outstanding total 347.91 million (source: latest 10Q). So on a per share
> basis Corvis has $2.64. August 17 CORV shares closed at $2.60.
>
> That means investors essentially value CORV at less than cash value.
>
> CORV traded August 17 BELOW enterprise value, or the working capital it
> has, less debt.
>
> Said another way, the way we see it, as investors we're getting Corvis'
> multi-hundreds of million dollar agreements with Williams, Broadwing,
> and Telefonica over the next few years, key technologies in leading
> optical solutions that telecom giants could sorely use, its pedigreed
> management, for nothing.
>
> To top it off the $2.64 per share in working capital CORV has could be
> attractive on its own to a buyer seeking its cash.
>
> There is plenty of risk, even with the technology and cash, however. The
> biggest risk to us is a telecom industry that doesn't seem to know that
> photons beat electrons. (Of course the cable guys do).
>
> Corvis has a lot of work to do to prove its solutions, although early
> feedback from the customers using Corvis gear, Broadwing and Williams,
> is positive. (See Broadwing.com).
>
> Corvis is early-stage and high risk, not a P/E play. Without the cash
> per share it wouldn't be half as compelling to us. But here's a company
> that looks to have cash and key technology, a rare combination in our
> book.
>
> - Disclaimer: Steve Harmon, High Velocity and Broadband Investor, affiliates, agents, partners, or any other affiliated entity does not make specific trading recommendations or give individualized market advice. Information contained in this report is provided as an information service only. We recommend that you get personal advice from an investment professional before buying or selling stocks or other securities. The securities markets and especially technology stocks are highly speculative areas for investments and only you can determine what level of risk is appropriate for you. Also, users should be aware that Steve Harmon, High Velocity and Broadband Investor, affiliates, agents, partners, or any other affiliated entity may own securities that are the subject of reports, reviews or analysis in this report. Although Steve Harmon, High Velocity and Broadband Investor, affiliates, agents, partners, or any other affiliated entity obtains the information reported herein from what
> it deems reliable sources, no warranty can be given as to the accuracy or completeness of any of the information provided or as to the results obtained by individuals using such information. Each user shall be responsible for the risks of their own investment activities and, in no event, shall Steve Harmon, affiliates, agents, partners, or any other affiliated entity be liable for any direct, indirect, actual, special or consequential damages resulting from the use of the information provided. |
