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Technology Stocks : Aware, Inc. - Hot or cold IPO? -- Ignore unavailable to you. Want to Upgrade?

To: Scrapps who wrote (2401)	1/20/1998 11:50:00 PM
From: David Lawrence	Read Replies (2) \| Respond to of 9236

Sorry if this is a repeat...... Aware Opens Investors' Eyes With High-Speed Data Deal By LISA BRANSTEN THE WALL STREET JOURNAL SAN FRANCISCO -- Shares of Aware, a developer of technology that speeds the transmission of data over telephone lines, jumped more than 20% Tuesday on the heels of news that Intel, Microsoft and Compaq Computer had chosen the tiny company's technology to play an important part in industry standards the consortium hopes to set. Investors drove Aware shares up 3 1/16, or 27%, to close at 14 5/16, but analysts remain divided about how positive the news was for the company. The news was first reported in Tuesday's New York Times. Meanwhile, Morgan Stanley's high-tech 35 index rose 12.45 to 456.26, while the Nasdaq Composite Index was up 27.26 to 1590.14. DSL is a digital technology that allows the transmission of data over existing copper telephone lines at speeds much higher than possible over ordinary connections. While the technology has been around for some time, the telephone companies that would provide DSL service have been slow to adopt the technology in part because they don't agree on standards. Also, most existing incarnations of the service require the phone company to install a device into a user's phone line that routes traffic according to whether it is voice or data. Aware's technology is attractive to Intel, Microsoft and Compaq because it does not require such a device, known as a "splitter." Therefore, consumers could implement the technology simply by purchasing a special modem at a retail store. Shares in Aware, which went public in 1996 for $10 apiece, have been volatile, rising to a 52-week high of 16 7/8 in June from a low of 8 1/2 in April. But shares had been trading around 10 since the beginning of October, when the company warned that its third-quarter earnings wouldn't meet analysts' expectations because of slow growth in the asymmetric DSL market. (ADSL is a variant of DSL in which data moves faster in one direction that the other.) In October, the company said that its results reflected "the general state of the ADSL market" and that the market would remain "in a gestation period" for a couple more quarters. For the 12 months ended September, Aware posted revenue of $6.1 million. Michael Neiberg, an analyst at Furman Selz LLC, upgraded his rating on Aware to "buy" based on the news, but left his earnings estimates unchanged, saying he doesn't expect the announcement to have a short-term effect on Aware's bottom line. He said he expects the Bedford, Mass., company's shares to hit $20 over the next 12 months. If the move by the consortium moves telephone carriers to put some marketing muscle behind the deployment of DSL, it should accelerate the deployment of the service, Mr. Neiberg said. And, he added, "if Compaq and Microsoft and Intel set the standard around what Aware does, then the assumption is that the other vendors would have to talk to Aware to get that technology." But Charles Pluckhahn, an analyst at Dain Rauscher Inc., said the consortium's proposal didn't mean the end of the debate over standards, especially because there are several large telecommunication equipment companies such as Lucent Technologies, Rockwell International and Northern Telecom working on versions of DSL technology. "I think that the Microsoft-Compaq-Intel initiative will wind up marking the beginning of a fairly long debate over whether or not to take this approach," he said. "There are still enough technological issues here to make this a more ambiguous story than it might look." Richard Doherty, director of Envisioneering Group, a market-research firm, said he expects the news to provoke a "free-for-all" among providers of similar technologies. "The recognition of Aware will bring new light and new funding to their competitors who are not well-funded or well-known," he said, adding that he believes consortium members have not yet decided whether to use just one ADSL vendor or to divide the business among several concerns. Also, he said, it is a classic Microsoft tactic to have several vendors bidding against each other for business in order to drive the price as low as possible.