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Technology Stocks : p-com (pcms) -- Ignore unavailable to you. Want to Upgrade?

To: PAR who wrote (776)	9/22/1998 8:26:00 PM
From: kvogel	Read Replies (1) \| Respond to of 1461

From Briefing.com. P-COM INC (PCMS) 3 7/8 +13/16. Typically analysts pull the rip-cord (i.e. suspend coverage) when a stock begins to approach the $5 level, as the firm may have a policy against covering "dollar" stocks or the individual analyst fears that the company has fallen into the pit of the living dead. But even at its recent low of $2.31 a share, PCMS was followed by a dozen analysts. The breadth of coverage is extremely positive in that it indicates that analysts truly expect the company to turnaround. Since the beginning of the year, shares of the California-based manufacturer of network access systems for the wireless telecommunications market have tumbled 78% and have fallen 87% from their 52-week high of $29.375. The stock has rallied 27% today on a Needham & Co initial "buy" rating. Story: Earnings have been in freefall since the December quarter due to dramatic slowdown in wireless infrastructure buildout on heels of the Asian economic conditions. Company has also experiencing competitive pricing environment in the Americas and Europe. Recent Developments: Company announced restructuring plan earlier this month, which included a 10% reduction in its workforce. Based on restructuring plan, Volpe Brown Whelan lowered its fiscal 1999 earnings estimate from a profit of $0.16 to a loss of $0.23 a share and its fiscal 1999 forecast from profits of $0.48 to $0.01 a share. Needham's View: Firm says P-Com shares have historically traded at 20-45 times next 12 months consensus (NTM) EPS estimate. Based on its NTM of $0.29 and applying a multiple of 23, firm arrives at 12-month price target of $7 a share. Bull Scenario: Analysts believe that P-Coms earnings are on the verge of turning-the-corner as a result of reacceleration of the global wireless infrastructure buildout. Fundamentals: Earnings Estimates (Needham): 1998= loss $0.18; 1999= $0.13 (P/E 30); 2000= $0.43 (P/E 9) Revenue Projections: (Needham) 1998= $220.9 mln; 1999= $269.1 mln; 2000= $307.4 mln Long-Term Growth Rate (First Call mean): 34% per annum Analyst Recommendations: 6 strong buys, 1 buy, 7 holds, 1 sell. This is what helped the stock today but I believe this quarter's results will cause some raised eyebrows. I would sell here and wait til after earnings release. Karl