E-Mailbag Monday: Luminent, PSINet, InfiniBand

What looks good for the IPO market this week?

Reply: Last week, the star IPO was
Optical Communications
Products
, which surged 63 percent. As for this week, there is another
optic stock to watch:
Luminent.

Like Optical Communications, Luminent is a component developer for metro
area networks – a marketplace that is expected to surge from $6.6 billion in
1999 to $23 billion in 2003.

In fact, Luminent has a broad product line. Components include active ones
(such as lasers, triplexers and modulators) and passive ones (attenuators,
fiber gratings and thin film filters).

In the first six months of 2000, revenues increased by 53.1 percent to $43.6
million. Profits were $2.3 million.

But there is some danger. Luminent is a spin-off of MRV Communications,
which will retain more than 90 percent of the company after the IPO. However,
within six months, MRV will distribute the rest of its shares to the public.
This will increase the dilution substantially and could ultimately weaken
the stock price.

The lead underwriter is CS First Boston and the price range is $13-$15 (the
company intends to issue 12 million shares). The proposed ticker symbol is
LMNE.

PSINet: Any Hope?

What do you think of PSINet at these levels?

Reply: Last week, the stock plunged more than 50 percent – and there
are good reasons for this.
PSINet’s president and
chief operating officer resigned. Also, the company announced it would miss
its fourth-quarter earnings projections.

The 52-week price range is $2 5/16 – $60 15/16. Currently, the stock trades
at $2-11/32 and the market cap is $445 million. And yes, there is about $1
billion in the bank.

Then again, the company has more than $3 billion in debt. The burn rate is
also scary – it is running at about $500 million per quarter. So while
there may be an acquisition of PSINet, it probably will not be at a premium.

InfiniBand: Some More Buzz

What does InfiniBand mean?

Reply: Basically, this is an emerging standard. It helps enable
high-speed connectivity within storage area networks. Apparently, the
standard can accommodate speeds of up to 6 Gbps.

The standard is quite new, introduced in 1999. The hope is that it will
replace the Fibre Channel standard. Supporters of the InfiniBand standard
include HP, Dell, Sun, Microsoft and Intel.

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