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Technology Stocks : TranSwitch Corp: Will they get Zenith Business? -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (641)	6/14/2002 9:23:03 PM
From: tejek	Respond to of 669

Transwitch sells chips to telecom carriers and they have stopped spending money on new products. One look at the lower revenues being seen by Nortel and Lucent should paint the picture clearly. There simply has been a halt to all major spending in this sector and what little spending that has been seen is buying existing products at very distressed prices. Basically, TXCC is a business without any major customers at this point in time. My view is that this industry won't pickup substantially until 2004 at the earliest and that it's very possible that it'll be 2005 before solid growth is expected. If my memory isn't failing me, I believe Lucent recently said they expect fairly flat revenue for 2003 vs 2002. If they aren't being too pessimistic, then TXCC will have a long wait before products are being ramped up in this sector. I think we will see plenty of mergers where the big fish will gobble up the small fries at a substantial discount to fair market value. I think your first sentence says it all. I understand that business is down for all the chips in the sector but whereas VTSS and PMCS have revenue down 60% YOY, TXCC's revs are down almost 90%. I don't have a breakout of operating expenses but I suspect R&D has gone by the wayside. If so, then what TXCC has to offer to a merger partner is $2+ per share in cash at a time when its competitors are hurting financially and don't need more stock dilution. If I remember correctly, TXCC fabless so that its assets are mostly intellectual. The risk in buying here is that over time they are eating up their cash. If a merger were to be announced in the next couple of months, then it most likely would be a doubleand a very profitable trade. What are you doing? As for a pickup in business, some are saying late 2003 but no one knows for sure. ted