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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Fine who wrote (5401)	4/17/1998 12:28:00 PM
From: H-nator	Read Replies (2) \| Respond to of 6980

Paul and thread: Let me add more speculation to a deteriorating scenario for next quarter. It is clear that Bay is resting all their hopes for revenue growth on sales of the Accelar product. Evidence that this product will succeed in the market place includes the non-denial of a 50-75% conversion rate of eval units to sales. However, Bay did acknowledge that the eval time typically fell between 8 to 12 weeks (essentially the entire quarter). Thus, this conversion rate must be based on a very small number of eval units shipped late last quarter or early this quarter (not a very large N for statistical analysis). In addition, it was noted in the conference call that much of the revenue from Accelar sales came from shops that purchased the units outright (not conversions of eval units); in other words, the revenue from Accelar products may not represent new customer wins, but may only represent "Bay shops" buying Bay's newest switch. The high conversion rate on these early eval units may represent shops in dire need of bandwidth expansion requiring early adoption of new technology. However, I expect the conversion rate to drop significantly in the short term for a number of reasons. One, Cisco's FUD campaign will continue to take its toll. Two, competitive products like Cabletron's Yago box will be shipping soon and I believe most shops will take their time to compare such capital intensive products before jumping in to new unproven technology. JMO and a large dose of WAG, H-nator