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Technology Stocks : E-net - (ETEL) Patented telephony product -- Ignore unavailable to you. Want to Upgrade?

To: PETER MORICI who wrote (460)	5/8/1999 1:14:00 PM
From: PETER MORICI	Read Replies (1) \| Respond to of 545

Com21 Unlike WIND, Com21 is showing signs of coming to life. Bolstered by AT&T's acquisition of MediaOne, the stock gapped higher on increased volume in yesterday's session. CMTO is a leading global provider of cable modem technology for delivering high-speed Internet access over CATV systems. The company enables cable operators and service providers with the abilities to provide high-speed, cost-effective Internet access to corporate telecommuters, small businesses, home offices and residential users. In other words, Com21 is well positioned to exploit the broadband bandwagon. Just how big will the market get? Well, according to Forrester Research 60 mln US homes will be online by the year 2002, of which 16 mln will have high-speed access, and 13 mln of those will enjoy connectivity over cable. Outside the US, high-speed online users will total an additional 24 mln. Naturally with growth potential that large, Com21 will have to fight to defend its turf from potential competitors such as Siemens, Motorola and/or 3Com. But like WIND in its market, CMTO has an early lead, strong technology and the management team to get the job done. According to one study Com21 ranked third in worldwide cable modem shipments for 1998. Though CMTO has yet to turn a profit in its relatively short history as a publicly traded company, revenue growth remains impressive. For the first quarter of 1999, Com21 posted revenues of $19.2 mln, a 174% jump from year-ago levels. The company also noted that its book-to-bill ratio was greater than one; product margins improved by over 400 basis points; and costs were coming down. Given improved operating efficiencies and strong top line growth, market expects company to post earnings of $0.16 in FY00... The consensus forecast for the FY99 calls for a loss of $0.41... Clearly, the company trades at a lofty p/e multiple but p/s ratio of 10.5x not out of line given much better than market growth. CMTO projected to deliver average annual growth of 50% over next 5 years. Another factor worth considering is that Com21 is/remains a prime takeover target. Among the potential suitors are 3Com, Lucent, Cisco and Siemens. Considering the frenzy created by AT&T's aggressive play for MediaOne, don't be surprised if we see a slew of deals in the broadband equipment area over next few months. Cutting edge technology, exceptional industry/company growth rates, modestly discounted valuations, strong, experienced management team, industry consolidation and improved technicals suggest that Com21 is poised for a near-term upside break out. Briefing.com's 12- to 18-mo target is 45.