CoSine: Positive Slope?

For me, the word “cosine” conjures up bad memories of trigonometry classes
in high school. However, the company
may present better memories.

Then again, you practically need to be a math whiz to figure out what the
company does. Basically, CoSine develops the IPSX 9000 switch. What does
it do? Well, the technology allows telecom carriers to offer value added
services to customers, such as virtual private networks (VPNs), firewalls
and intrusion detections. In fact, the CoSine technology does not require a
team of consultants for its installation. Implementing a switch is like,
well, as simple as turning a switch.

The IPSX 9000 is quite flexible. The switch architecture has scalable
ASIC-based processors. What’s more, the technology has an open operating
system, making it easy to add new services.

The technology is the result of a strong management team. The CEO and
co-founder, Dean Hamilton, has 15 years of tech development experience, such
as with the Carrier Signaling Infrastructure Business Unit at Ascend, where
he developed intelligent networking products. The Chief Technical Officer,
Lianghwa Jou, has a deep background with intelligent networking equipment
for carrier-class Internet access products.

The company also has a strong finance department, which is crucial in the
networking equipment industry (that is, M&A is crucial). Craig Collins, the
CFO, was the VP of Corporate Finance at JDS Unisphase, a company that
understands how to carry out big-time M&A.

And the board is strong. Vinton Cert, known as the “Father of the
Internet” (hey, he co-developed TCP/IP), is the Senior Vice President for
Internet Architecture and Technology at WorldCom.

It also helps that the company received financing and advice from Vinod
Khosla, who is a partner at Kleiner Perkins and a guru with optics. He
serves on the boards of Corvis, Juniper Networks and QWEST Communications.

CoSine is young, with its products launched in the first quarter of 2000.
So far, the company has generated $7.2 million in revenues. But, there is a
backlog of at least $49.8 million. With the industry growing at a vigorous
rate, expect a strong revenue ramp-up. While the company had an explosive
IPO, the stock has since fallen – going from $71 to $40. With a positive
earnings report, it would not be a surprise to see a pop in the stock price.

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