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Technology Stocks : ICOM: Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Otimer who wrote (125)	3/12/1998 9:16:00 PM
From: SteveG	Read Replies (1) \| Respond to of 494

Part of H&Q Joe Noel's March 9th 2 pager. I meant to post sooner but have been overloaded elsewhere. Email me for a uuencoded pdf copy of complete report w/ tables (you'll need uudecode and acrobat to read, though) ====== On Tuesday, we had a chance to visit with ICOM management at their headquarters in Richardson, TX. The meeting was upbeat, we got a chance to see Intelect's technology demonstrated firsthand, and we met the company's new Senior VP of Engineering. Details of the meeting are as follows. We expect Intelect to sign a distribution agreement with at least one major supplier of telecom and networking equipment during the next two months. This agreement will likely be focused on the SonetLYNX product. It is unclear at this point in time if the deal will be structured as an OEM agreement or as a straight distribution pact. Development of the CS4 switch continues to progress. This product is expected to begin commercial shipping during the 4th Quarter 1998, and the company believes that it has strong prospects for a large initial customer for that product. At this point in time it is undecided if this product will be sold and marketed as an ICOM product or through an OEM or other type of agreement. Management reiterated their belief that the company has enough non-Asian prospects for its SonetLYNX product to meet current analyst estimates for revenues and per share earnings for 1998 without Asian revenues. This would mean that any Asian revenues would be an upside to our model. Despite this, management is also positive about Asia, its joint venture in Korea, and the possibility that there may be more business in Asia for the company in 1998 than in 1997. In keeping with the company's comments on their 4th Quarter 1997 conference call, we are lowering our 1st Quarter 1998 numbers, but will keep our FY 1998 numbers steady. Estimates per share for 1998 move from ($0.03) on revenues of $14.4 million to ($0.10) on $13.4 million. The fiscal year 1998 estimates remain at $0.40 EPS on revenues of $84.0 million. Recommendation: We are reiterating BUY recommendation on ICOM. We feel that much of the possible negative impacts of delayed product roll-out, partnership uncertainty and Asian exposure have been built into the stock at this price. Looking forward, we feel that given the current stock price, the company's strong line up of products, and its possible opportunities for distribution of those products, that the upside potential outweighs the downside risk for this stock. ============