Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Mighty Mizzou who wrote (60434)	3/25/1999 12:06:00 PM
From: The Phoenix	Read Replies (1) \| Respond to of 61433

Why would LU/ASND want to get into the PC Nic/PCMCIA business. Low margin, orthoginal channels, etc... Mory's on the board of XIRC because he was/is pal's with the old gang from Micom from which Mory and some of the early execs at Xircom came from.... OG

To: Mighty Mizzou who wrote (60434)	3/25/1999 1:08:00 PM
From: Mighty Mizzou	Read Replies (3) \| Respond to of 61433

OT - Forbes Mag on XIRC: forbes.com The cards are redealt By Anne Linsmayer FALL BEHIND in the computer business for just a microsecond, and your business might disappear on you. Dirk Gates, 37, cofounder and chief executive of Thousand Oaks, Calif.-based Xircom, knows this all too well. The maker of plug-in PC cards for laptop computers got into trouble in 1995, when its 70%-plus market share shrank overnight, to 20%. "In a two-quarter span, we basically gift-wrapped half our share and gave it to 3Com," Gates says. What went awry? Xircom botched a product release. As it readied a new version of the cards that plug in to laptops to let users link up with their office network, it discontinued the predecessor, assuming customers would upgrade. Wrong. Many were irked, and they took up new cards from 3Com, most notably its Megahertz cards. On sales of $120 million in 1995, Xircom posted a loss of $59 million. But Gates survived for another hand of cards. He stopped using subcontractors and pulled all his in-house manufacturing in 1996, setting up a plant in Penang, Malaysia. That lowered labor costs, shortened the supply chain and shrank inventory. Xircom also shed two wireless units. Xircom is hitting the jackpot once again. Its new hit product is the RealPort. Priced at $150 to $350 and on the market only six months, the RealPort line helped Xircom produce 50% sales growth, to $276 million, and earn $18 million for the fiscal year that ended last Sept. 30. The RealPort could provide as much as 70% of revenue in the current fiscal year, driving total sales past $400 million. Xircom's once-battered stock recently hit $46, an all-time high since going public in 1992. The attraction of RealPort: It eliminates cumbersome connector cables that PC cards typically use. Broken or lost cables are a big hassle for remote users who link up over phone lines to their offices or the Internet. The 3Com card cuts cables, too, but uses tiny pop-out sockets for plugging in the phone line. Xircom lets the phone line, network cable and even cellular phone cord plug directly into the card itself. And the RealPort has fewer parts, helping boost profit margins 11 points, to 41%. Even Gates' rivals at 3Com are taking notice. "They have a flash in the pan right now," sniffs 3Com Marketing Vice President Richard Redelfs. So far, so good. But you can't blink in this kind of market. A new challenge looms. Laptop makers began to integrate the functions that Xircom handles into the computer itself. Could this slow the need for PC cards? "More of the technology is being embedded in the laptops. This doesn't play well for Xircom," 3Com's Redelfs says. Xircom's Gates, of course, is betting otherwise. For one thing, his customers are headstrong technology managers at companies like Sears, Roebuck & Co. and Lexis-Nexis who order PC cards in bulk from resellers. They like choosing their own options rather than having built-in features forced on them, Gates says. "For the small office/home-office market, built-in solutions do make sense. But that's not our market," he says. Theresa Nozick, an analyst with Mobile Insights in Mountain View, Calif., adds, "Corporations don't like to be made to standardize." Just in case, Gates is also working with laptop manufacturers to supply internal modems that might otherwise threaten his comeback. Gates says the real boom in his card business has yet to come. Japan, where Xircom opened a sales office last fall, has 25% of the world's notebook users—a large and waiting market for the RealPort. He isn't worried about his dependence on the hot, new product. "Focus is a good thing," he says. At least, it is until the market zigzags on him yet again—then he'll need a new focus.