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

To: Bald Man from Mars who wrote (8263)	4/26/1998 12:21:00 AM
From: fred woodall	Respond to of 12559

The continued use of asynchronous transfer mode, or ATM, technology to build computer networks and strong sales of several new high-speed ATM products lifted Fore Systems Inc.'s fiscal fourth-quarter earnings above expectations. The ATM-centric networking equipment maker's strong results late Thursday boosted the stock more than 14% Friday and showed that ATM technology continues to hold its own against competing Ethernet solutions. At the close, shares of Fore (FORE) were up $2.50 at $19.875, on volume of 13 million shares. ATM, which today is used primarily to transmit data, is well-suited for multimedia applications like voice and video transmission. Although some of Fore's products for the periphery of the network use Ethernet and other networking technologies like token ring, the company's products for the core of the network are all based on ATM technology. Fore Systems late Thursday reported earnings of 13 cents a share on $131.2 million in revenue for its fourth quarter ended March 31, compared with earnings of nine cents a share on $101.3 million in revenue a year earlier. Wall Street had been expecting earnings of 11 cents a share, according to First Call. One analyst said he believes the stock was up Friday because some investors had worried Fore would miss estimates. The company earned 35 cents a diluted share on $458.37 million in revenue for the full year, compared with 41 cents on $395.3 million in fiscal 1997. According to Lazard Freres & Co. analyst Michael Duran, ATM product revenue was up 14% sequentially for the quarter due to strong unit demand and higher average selling prices. Duran said new high-speed Optical Carrier 12 products, which operate at 622 megabits per second, lifted Fore's results. These include an OC-12 adapter card for servers and an OC-12 interface for switches. These OC 12 products are a "step up" from OC-3 products, which transmit data at 155 megabits per second, Duran said. And they represent a "tangible alternative" to emerging Gigabit Ethernet products, which are still just beginning to come to market, he added. Despite increased sales and marketing spending, lower research and development spending lifted Fore's operating margins in the fourth quarter, he said. The company told analysts it expects revenue to rise by 5% to 10% sequentially over the next few quarters and operating margins to climb to 15% by the fourth quarter of fiscal 1999 compared with 10% in the quarter just reported. Fore also said it expects gross margins, which were 55.1% in the fourth quarter, to be between 55% and 56% going forward. Duran said he expects Fore to launch the ASX-4000, a high-end ATM switch with a 40 gigabit-per-second capacity, at the Interop trade show in early May. The analyst lifted his earnings estimates to 64 cents a share from 62 cents for fiscal 1999 and to 84 cents from 81 cents for fiscal 2000.