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Technology Stocks : Dialogic ready to soar, funds buying -- Ignore unavailable to you. Want to Upgrade?

To: GuinnessGuy who wrote (524)	12/28/1997 8:59:00 PM
From: Jay M. Harris	Read Replies (2) \| Respond to of 674

Craig; Dialogic was upgraded by Piper for valuation reasons, with a $54 18 month target. I'm putting a 90% probability that the target will be achieved by the end of calendar 3q 1998. I don't think Piper underwrites for DLGC. However, I'm not positive. While the Cisco announcment was a negative for Dialogic, it is a long term negative (18 to 24 months). This is because Cisco needs more than simply PBX integration and signal compression algorithms to control CTI marketshare. Currently, Dialogic retains 65% of the open component market domestically, and 90% internationally. Cisco needs to establish a call center "beachhead". Also, there are several other technical aspects of CTI that were not included in the Cisco announcement that Cisco needs to address. These have to do with bus (hardware) and middleware (application interface) standards that are currently necessary for faster application developement and better CTI connectivity. Dialogic's turf will be attacked in the future by Lucent trying to establish open API's on their PBX's from the switched circuit side of the public telecom network. Also, Cisco needs to get into this market and will in fact one day compete with Dialogic from the datacom side of telephony integration. However, Cisco will need several more aquisitions to address the time to market requirements of Cisco's customers. This will not happen over night. Frankly, I would not be surprised if Natural Microsystems and Dialogic were aquired within the next 12 months. This is because the race for internet telephony is on for the big telecom and datacom equipment players, and Dialogic and Natural have exactly what the big vendors want, namely, a sound CTI technology portfolio to integrate into datacom solutions. In closing, the PBX and now datacom vendors have their sights set on Computer Telephony Integration. This is a very strategic technology for all camps. I currently have not adjusted my 12 month $60 target for Dialogic, or , 33X $1.83 EPS for calendar 1998. Caution: these numbers are higher than street concensus. Please be aware that this is my largest personal holding and I have been long the company since the IPO in 1994. Also, with the market heating up, primary research is required! I will do as much as humanly possible to keep DLGC threaders out of harms way on the research side of things. However, this stock is extremely volatile and is not for those who are risk adverse. Hope this helps, Jay