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

To: jim detwiler who wrote (7304)	1/29/1998 7:16:00 AM
From: Igor Nasonov	Read Replies (1) \| Respond to of 12559

Fore's article on TheStreet.com Silicon Valley: Montgomery Tech Conference: Fore Systems Continues to Struggle By Kevin Petrie Staff Reporter 1/28/98 11:42 AM ET SAN FRANCISCO -- Combine a fresh CEO, a renewed marketing campaign and strong sequential growth. Stir the ingredients at the NationsBanc Montgomery Securities Technology Week, where hundreds of money managers crave a tasty investment. And what do you get? A stock got crushed like a ruined souffle. That's what happened to Fore Systems (FORE:Nasdaq), a company that already took a round trip on the stock charts. The second rise, attempted in recent months, has been less dramatic. Fore veteran Tom Gill, promoted to CEO only days ago, told investors in the small, half-filled room Tuesday that Fore's "networks of steel" will pierce the burgeoning ATM market. A renewed sales and marketing push will make it happen, he said. And the stock traded lower, ending down 1 1/16 to 14 5/16 after a breakout session with analysts later in the morning failed to help the ailing stock recover. "They need muscles," asserts one buy-side analyst (perhaps she hasn't seen the recent print advertisement featuring a brawny steelworker from Fore's hometown of Pittsburgh). One Fore investor liked Gill's "fire" for marketing products, but said he wasn't moved to buy additional shares. A potential investor listening to the speech said that Gill's words didn't move him to buy either. Although Gill had touched down at San Francisco airport three short hours before his 8:05 a.m. speech, he summoned plenty of energy to speak about the new marketing campaign. It includes print ads, many cast against a gray bolted-steel background, which say things like, "you can't build skyscrapers out of hype. The same goes for networks." Another: "9 out of 10 network managers want the networks we make. They just don't know we make them." The thing is, everyone used to know about Fore. Its shares lifted from an IPO price of just above 5 to above 41 in September 1996 before deflating to below 15 in early 1997. Even after that swoon, Fore still trades at 55 times trailing 12-months earnings. Recently Fore has regained ground. Revenue in the quarter ended Dec. 31 was $122.1 million, an 11% sequential increase. Profits were $10.1 million, or 10 cents per share, up 44% sequentially. Still, the stock declined after the release on Jan. 21 due to worries about future growth. Fore, like most of the companies at the show, banned the press from its breakout session. But collared after the session, Gill said he wouldn't speculate about why the stock was falling. He added that questioners in the breakout session weren't particularly worried about how Fore would compete with broad-based industry leader Cisco (CSCO:Nasdaq). As the elevator door shut on his arm, Gill explained patiently what has changed since Fore's profits and revenue faltered in late 1996. The company has revamped its sales channel and especially its sales force, he said. Indeed, Gill had said in his speech that in the December quarter Fore's sales force outnumbered engineers for the first time. A techtonic market shift caught Fore in 1996. The networking upstart had promoted "asynchronous transfer mode" or ATM technology as an advanced way to shuttle rich multimedia signals between computers in a corporation. At first, corporations scarfed it up -- Fore's revenue rocketed along with its stock price. Then something changed. Some corporations decided to upgrade to speedier versions of traditional "ethernet" systems instead of ATM. The real opportunity for ATM became phone companies, which have been deploying big ATM boxes in their networks. That trend helped Newbridge (NN:NYSE) prosper in 1997, and that's what people are excited about. Fore really excels in the mainstream corporate market, which generates less enthusiasm with investors. But until Fore cooks up something hot in that space, and after a bland presentation Tuesday, the stock continues to look more like toast than souffle.