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.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: j g cordes who wrote (20471)	4/13/1999 4:32:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 67941

Jim, I don't have any position in either stock right now. The action on ADTN indicates someone thinks they will beat the numbers. I didn't see any institutional trades today though. I like AFCI better. It has been locked in a trading range the last few months. The down side risk is 2 points. The near term upside target is 12. I may take a small position tomorrow or wait for forward guidance from ADTN and commit to a larger position. There was good institutional trading in the stock today though the buying cancelled the selling out. Given the hype on DSL recently, the focus should come back to AFCI soon. This article covers the players on the DSL side news.com Excerpt on DSL article AWARE (AWRE) 77 1/2 +12 5/8 Briefing.com first became aware of Aware at the AEA Conference back in November. We wrote positively about it at the time, in our Stock Brief of Nov. 10, 1998, when it was trading at $15 a share. It has been a fantastic six months for the little company with 86 employees. Aware is about the purest play on DSL technology that you can find. Aware designs and licenses the logic inside DSL chips, but it neither manufactures nor sells chips. All of its revenue is derived from licenses to DSL chip manufacturers. It's largest client had been Lucent Technologies, but today Bloomberg News reported that Bell Atlantic (BEL) has signed a deal with Northern Telecom (NT) to buy more than $600 million of DSL technology as it rolls out xDSL services to the East Coast. Northern Telecom's technology uses the Aware designs, and therefore Aware will be paid royalties on every chip in each box sold. Aware is a great way to play the coming DSL advance because they have none of the financial burdens associated with hardware manufacturing, such as plant development costs or inventory worries, giving them a much higher gross margin. This means that although revenues may be smaller, net profits could be just as much as a chip company ten times the size. The risk with Aware has always been that, as a small player, their designs will be made obsolete by a larger player, even if the technology is inferior. But with a broadening of the client base, and major players like Bell Atlantic making such a large commitment to Aware based technology, that risk gets smaller. Once established, which today's action is a confirmation of, Aware stands to ride a royalty wave if DSL takes off. Other big action in the DSL arena today: Covad (COVAD) signed a deal with PSINet (PSIX) to provide DSL technology, and with Frontline Communications , another ISP. COVAD trading at 106 9/16 +25 1/16. The providers of high-speed access to the Internet also being picked up by traders, specifically providers of Digital Subscriber Line (DSL) technology. Stocks participating in the move include Covad Communications (COVD 113 1/2 +32), Tut Systems (TUTS 73 1/2 +18 5/8) and Aware Inc (AWRE 79 +14 1/8). Earnings Reports: Intel reports after-the-close tomorrow. Given negative indications coming from the box makers and recent comments from analyst that company not likely to exceed quarterly earnings expectations, traders might want to reduce exposure to tech going into the report, as negative comments from Intel would likely send market into a nose-dive. For continuously updated coverage of the stocks attracting the interest of traders, see the In Play <inplay.htm> page. Briefing perspective on going with DSL for their own connection: Option number 1 was next to go. It certainly would take care of our needs, as it would offer guaranteed higher bandwidth both upstream and downstream. One problem, however -- price. The ISP charge only went up marginally, to about $450, but the RBOC charge would go from $80 to $400. There's a little lesson here about why the RBOCs haven't been diving head first into DSL or other high bandwidth options -- they make a lot of money in the T1/T3 business. That's $400/month just for the circuit, forget the connection to the Internet. If that was our only option, we would have paid the price, but thankfully, it was not. Harry