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

To: Thomas Yi who wrote (478)	6/4/1999 12:08:00 AM
From: Jay Fisk	Respond to of 2347

The followup to Greenberg's piece - read the whole article here: smartmoney.com ""IF THE MARKET for cable modems is going to be so big, how come the stock prices of modem makers Terayon (TERN) and Com21 (CMTO) are getting so small? The stocks are off at least 50% from their 52-week highs, having tumbled more than 20% in the past week. That, plus strong earnings expectations made them naturals for today's screen looking for companies with lots of cash and little debt -- good prospects for a skittish tech investor crowd. (For details on how we selected the stocks, see our recipe.) Remember, cable modems enable high-speed Internet access over cable lines, and will play important roles in the phone service that big cable companies such as AT&T (T) desperately want to sell. Right now, about a million households lease cable modems from their cable service providers, who buy them from manufacturers. As technology improves, investors expect cable modems to go from a $585 million market today to a $5 billion market in 2002. So why the long faces among cable modem investors? They fear that as Web TV and Internet telephony spread, cable modems will be available at retail outlets like CompUSA (CPU) for far less than the $300 they currently cost. Just last week, Com21 announced that average sales prices could drop as much as 8% this quarter due to increased retail competition. Credit Suisse First Boston analyst James Parmelee quickly spread the word in a report, predicting a 1% decline in gross margins as a result of price erosion. Analysts have gotten used to 5% to 6% price declines, and when Parmelee put a 10% price decline in his model, this popped open the dumpsters -- even though the anticipated effect on Com21's gross margin was less than 1%. """ Lots more at the link - well balanced article, a must read, rational counter-point to the simplistic version from "the Street." Especially the projected 70% growth rate, awesome ! ---------------------------------------------------------------- I'll reserve my thoughts on Herb's motivation to write this piece for a later post as this play unfolds. Any idea who crossed that 100,000 block with MLCO mid-day ???