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Technology Stocks : COM21 (CMTO) -- Ignore unavailable to you. Want to Upgrade?

To: Dennis R. Duke who wrote (438)	5/26/1999 1:00:00 AM
From: Jay Fisk	Respond to of 2347

DJ COM21 Chief Exec "Comfortable" With 2Q Views By Shawn Young NEW YORK (Dow Jones)--COM21 Inc. (CMTO) is "comfortable" with the prevailing estimates regarding its second-quarter financial performance, President and Chief Executive Peter D. Fenner told Dow Jones Newswires. The Milpitas, Calif., cable modem company's stock has taken a beating lately over investor concern that margins are slipping. COM21's shares are have dropped from about 30 at the beginning of last week to a close Monday of 18 1/4. Recently shares were down another 5/8, or 3.4%, to 17 5/8 in brisk Nasdaq trading. Clearer technical standards have brought new competition into the field, leading to lower prices and slimmer margins, Fenner said, but the company has been projecting that for months. Investors overreacted to expectations of tighter margins last week after the company met with a group from Credit Suisse First Boston, Fenner said. "We did not say anything there we hadn't been saying," Fenner said. Since the company had enjoyed margins as high as 44%, "expectations sort of got set no matter what we said," Fenner remarked. The company is comfortable with expectations that margins will be 38% or 39% and that revenue will be about $19 million, said Fenner. The First Call Corp. consensus estimate is that the company will report an operating loss of 12 cents a diluted share. In the year-ago period, the company lost $4.2 million, or 28 cents a share, on revenue of $8.7 million. The same falling prices and rising consumer interest in modems capable of delivering high-speed Internet service over cable lines that is hurting margins will also expand the market, Fenner said. "We think we're in a good position," he said. One of the company's largest customers has been the former Tele-Communications Inc., now the cornerstone of AT&T Corp.'s (T) plan to provide combined local phone, long-distance and Internet service over cable lines. AT&T also plans to buy MediaOne Group Inc. (UMG) and forge partnerships with other cable companies. With AT&T hawking two-way cable service and competitors scrambling to come up with competing services, the market for the type of equipment COM21 makes should be substantial, Fenner said. Another recent drag on COM21's stock has been the resignation of former Chief Technical Officer Mark Laubach, who left the company last week for personal reasons. Laubach was replaced by John Pickens, who had directed technology development at the company. Fenner said he hopes Laubach will return, but the company has has a strong technical staff that will do well even if he doesn't. As COM21's commercial customers undergo a wave of consolidation, COM21 is running its business on the assumption that it will remain independent, Fenner said. "We're not actively pursuing anybody or being pursued," he said. However, the company might be most interested in examining proposals that include channels to large businesses, he said.