Xircom, stocks and Y2k

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Can Broadband Turn Around Xircom?


Analyst: Alex Yakirevich (3/29/00)

Investors sliced 10% from Xircom's (NASDAQ:XIRC) stock price without much hesitance Friday, after the company said it would miss its second quarter estimate.

In a conference call Friday, the company said its operating results would be $0.30 to $0.35 per share, well below the consensus estimate of $0.56 per share, due to slower post-Y2K order flow.

Shares of the manufacturer of enabling products for mobile communications are now trading around $36.31, well below its 52-week high of $75.94 per share.

We think that recent weakness in shares of the Thousand Oaks, Calif.-based company creates a compelling investment opportunity for investors.

To begin with, management is firm in its belief that the lackluster performance in the second quarter is an extraordinary event and that business prospects for the rest of the year are strong. The shortfall in the quarter is a one-time event, which is now past us, said Dirk I. Gates, Xircom's chairman. Specifically, he noted that sales in the latest three weeks are up some 25% compared with the first three weeks of the quarter.

In addition, Gates points out that large customers, such as AT&T (NYSE:T), Microsoft (NASDAQ:MSFT), and Oracle (NASDAQ:ORCL), whose orders are typically in the range of 2,000 to 8,000 PC access cards (one of the company's principal products), are becoming active following a Y2K spending freeze, which lingered until February 29. Based on the first three weeks of the month, Xircom anticipates closing as many as 40 multi-units deals in March alone.


-- (Stocks@nd.Y2k), March 30, 2000

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