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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: TheSlowLane who wrote (9856)	12/29/1998 3:09:00 PM
From: SteveG	Read Replies (1) \| Respond to of 12468

AFCI referencing WCII (Lehman) from last week: ============ Headline: Advanced Fibre Commu: Ringing in the New Year with an Improved Outlook Author: Steven D. Levy / Sender Cohen /Andrea Green Rating: 1 Company: AFCI Country: COM CUS Industry: TELECM Ticker : AFCI Rank(Old): 1-Buy Rank(New): 1-Buy Price : $8 7/16 52wk Range: $45-4.03 Price Target (Old): $14 Today's Date : 12/21/98 Price Target (New): $14 Fiscal Year : DEC ---------------------------------------------------------------------- EPS 1997 1998 1999 QTR. Actual Old New Old New 1st: 0.06A 0.15A 0.15A 0.07E 0.07E 2nd: 0.10A 0.09A 0.09A 0.08E 0.08E 3rd: 0.14A 0.03A 0.03A 0.11E 0.11E 4th: 0.17A 0.06E 0.06E 0.14E 0.14E ---------------------------------------------------------------------- Year:$ 0.47A $ 0.33E $ 0.33E $ 0.40E $ 0.40E Street Est.: $ 0.35E $ 0.32E $ 0.39E $ 0.38E ---------------------------------------------------------------------- Price (As of 12/21 @ 2:30): $8 7/16 Revenue (1998): 313.4 Mil. Return On Equity (98): N/A Proj. 5yr EPS Grth: N/A Shares Outstanding: 78.7 Mil. Dividend Yield: N/A Mkt Capitalization: 664.19 Mil. P/E 1998; 1999 : 25.6 X; 21.1 X Current Book Value: $3.30 /sh Convertible: - -Debt- to-Capital: 0.6 % Disclosure(s): G, C ---------------------------------------------------------------------- * We anticipate that Advanced Fibre could end 1998 on an upbeat note and we have improved hopes for 1999 after conversations with company management today. * Some rays of light are shining through from four different areas: Sprint, Winstar, international customers and gross margin expansion. * We are forecasting fourth quarter revenues of $76 million and are looking for EPS of $0.06. At this point, we maintain our $13-$15 price target and believe our 1999 estimates of $376 million in revenues and $0.40 in EPS should be reaffirmed after we learn more details of the fourth quarter. ---------------------------------------------------------------------- As we prepare to ring in the New Year, we anticipate that Advanced Fibre could end 1998 on an upbeat note and we have improved hopes for 1999 after conversations with company management today. The following four factors suggest the fourth quarter is on track and momentum is building for 1999. Rays of Light: (1) Sprint: Shipments of Advanced Fibre's 1440 Digital Loop Carrier (DLC) systems to Sprint began during the December quarter; Advanced Fibre's larger line size Digital Loop Carrier (DLC) system - with up to 2000 lines - was approved at Sprint in October. Prior to that time Sprint had been purchasing only Advanced Fibre's smaller line size systems - up to 240 lines - since 1996. We also have further confidence that Sprint could be a $50 million customer in 1998 since Advanced Fibre could benefit from last week's announcement that the Sprint ION network would offer ADSL service directly. In our opinion, Advanced Fibre's Digital Loop Carrier system could be a popular selection for use with ADSL systems. (2) Winstar: Some concerns arose in October that Winstar could slow its purchases of DLC systems from Advanced Fibre as a result of the CLEC's $2 billion financing agreement with Lucent. This is a "best of breed" agreement which allows Winstar to use financing from Lucent to purchase equipment, but not necessarily Lucent equipment, if a competitor's product is deemed the best for the Winstar. It appears these concerns were unwarranted as Advanced Fibre shipments of DLC systems to Winstar remain strong through the fourth quarter. (3) International Customers: Demand for Advanced Fibre products from international customers appears to have stopped deteriorating. During the past few months, orders from major customers in Venezuela, France, and China slowed down due to the difficult economic situations in each of the countries. It seems that the picture is improving and Advanced Fibre is receiving optimistic signals from some of its international customers. (4) Gross Margin Expansion: Gross margins are expected to be strong in the fourth quarter as the mix of business is likely to be more heavily weighted with higher-margin domestic business versus lower-margin international sales. We are looking for 44% gross margins but would not be surprised if actual margins exceeded our expectations. The combination of the above factors increases our confidence in the December quarter. We are forecasting fourth quarter revenues of $76 million, up 14% sequentially and down 10% year over year. On the bottom line, we are looking for EPS of $0.06. At this point, we maintain our $13-$15 price target and believe our 1999 estimates should be reaffirmed after we learn more details of the fourth quarter when results are announced in January. On the CEO front, we believe the search continues. BUSINESS DESCRIPTION: AFC manufactures the UMC-1000, an NGDLC, which is used in the local loop. The UMC-1000 provides any service from POTS to xDSL over copper, fiber, HDSL, and radio transport media. ---------------------------------------------------------------------- Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities. This document is for information purposes only. We do not represent that this information is complete or accurate. All opinions are subject to change. The securities mentioned may not be eligible for sale in some states or countries. This document has been prepared by Lehman Brothers Inc., Members SIPC, on behalf of Lehman Brothers International (Europe), which is regulated by the SFA. ] ============ If interested further in AFCI, check out Morgam's AFCI report on their thread. And is SATH the next SKYM / VVTV? Unlike many retailers/internets, they have earnings, are followed by NBMO and will beat the street's numbers next month. Of course, fundamentals are irrelevant with this group. The negative is a 13MM float. To get and keep the 500% to 2000% price gains, float has to be manageably small (think TGNT). WARNING - do your own due diligence.