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Technology Stocks : Terayon - S CDMA player (TERN) -- Ignore unavailable to you. Want to Upgrade?

To: Geof Hollingsworth who wrote (57)	2/20/1999 1:13:00 PM
From: Bernard Levy	Respond to of 1658

Hi Geof and Robert: Geof, thanks for confirming what was my understanding of the status of the Hi-Phy standard approval process. I was not aware of AT&T's work on their own upstream modulation technology, but if the rumors that they are looking at DMT are correct, I am delighted this is the case. As a side comment, my earlier references to BRCM should not be interpreted as an endorsement of a BRCM investment. BRCM is a fine company, but its valuation makes my head spin. Many of BRCM's products will soon be commoditized. The announcement of the Libit-Intel deal on the development of a host-based cable modem is only the starting point of this trend. Best regards, Bernard Levy

To: Geof Hollingsworth who wrote (57)	3/10/1999 10:10:00 PM
From: Bobo	Read Replies (1) \| Respond to of 1658

Geof, So you know my bias, I am short TERN. I was not aware of the the 802.14 committee outcome. How certain are you that S-CDMA is only an option to Broadcom's proposed upstream scheme? Also, when you say "integrated RF frontend," do you mean integrated into their S-CDMA ASIC. I was not aware that the Broadcom players had an integrated RF frontend. I thought it was always an additional purchased or built module. I was actually impressed that Terayon won the recent UPC tender. That is a pretty big win since I belive that UPC is the number 2 or 3 MSO in Europe. It will be interesting to see how many modems the company rolls out over two years since 225k would lead to more than 5% penetration in their cable subscriber base. As I understand it, Terayon is poised to announce a significant domestic carrier (top 10) as well. I do not know who it is but feel that it is likely Century, Charter or Adelphia. Adelphia would be a bit of a surprise since they have been running DOCSIS trials. Anyway with these wins included, I still do not expect Terayon to garner more than 12% market share. Assuming the market for modems and headends is $2bb in 2002, Terayon goes to $240mm and marginally profitable. I give it 1X sales and see a $10 or $11 stock. Granted, a few more big wins or some tremendous explosion internationally and the story is a bit different. One of the things people do not understand about this equipment is how the ratio of modems to CMTS's will increase since a CMTS is a shared media system that can support several hundred modems (Terayon claims 1,000). This means that as time goes on, MSO's purchase more lower, or negative margin, modems to headends. This trend is already evident in Terayon's numbers over 1998. It seems like it will be an uphill battle.