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Technology Stocks : SONS -- Ignore unavailable to you. Want to Upgrade?

To: John Hayman who wrote (658)	9/19/2006 8:55:48 AM
From: carranza2	Read Replies (1) \| Respond to of 1575

Yeeeehaw! Good stuff. Word must hae leaked out yesterday as there was a very nice spike. I wondered why, now we know.

To: John Hayman who wrote (658)	9/19/2006 10:27:41 AM
From: Cooters	Respond to of 1575

CSFB on SONS Update--VON Conference • Investment Thesis. SONS is one of the leading suppliers to communication service providers of Voice over IP (VoIP) switching infrastructure. We believe that the migration by SPs from circuit to VoIP infr will drive significant growth in SONS’s oper profitability. • Reinforced Near and LT Outlook. Recent industry checks, including our attendance from Sept 11 – 14 at the VON (Voice over the Net) conf in Boston, have reinforced our confidence in our near- and longer-term outlook for SONS’s oper model. We expect SONS to report 3Q06 results and 4Q06 outlook above our REV/PF EPS (incl FAS123) $64.5mln/$0.03 and $68.0mln/$0.03 respective estimates, driven by our expectation that SONS will finally recognize initial rev.s from KDDI’s Class 4 VoIP deployment and by ongoing expansion in SONS’s customer-base and continuing deployments by existing customers. • VON. We emerged from VON with bolstered confidence in our VoIP mrkt projections of 30+% annual growth over the next three to five years, with a 10-year CAGR of 10+%. More importantly, our conversations with industry contacts at VON reinforce our belief that SONS will continue to capture its share of this fast growing mrkt. Among other SONS SP customers, we spoke with or listened to presentations by Level3, Global Crossing, XO, Qwest, AT&T, Bell South, EarthLink, AOL, and Vonage. Some datapoints follow: (1) relatively stable pricing in the VoIP market at present; and (2) continued strong demand for SONS VoIP infr driven by continuing strong growth in MOU; encouraging early results for new VoIP services that are being used by new voice entrants and incumbent SPs out of region; a number of SPs expanding or planning to expand the range of SONS’s platforms in their VoIP networks; and a number of SPs contemplating or already having commenced expansion of SONS infr from Class 4 toll-tandem to Class 5 broadband VoIP appl.s. SONS’s recently announced agr with EMBARQ Logistics could drive some incremental rev.s by extending SONS’s sales reach to several hundred IOCs (albeit each one relatively small). • Estimates. While we are not changing our est.s, we have increased confidence in our Street high FY06 and FY07 Rev/Pro Forma EPS (incl. FAS123R) est.s of $256.9mln/$0.12 and $323mln/$0.26. • Valuation. Our 12-month $7.50 price target is driven by applying 26x to our FY07 $0.29 Pro-Forma EPS (excl. options exp) estimate.