E-Mailbag Monday: Sonus Networks, Digital Entertainment, M-Commerce

What looks good in the IPO market this week?

Reply: There are some signs of life in the IPO market. This was
evidenced by the impressive showing of New Focus last week. Apparently,
investors still want infrastructure stocks – especially those focused on
optics.

For this week, take a look at Sonus Networks.
The company develops sophisticated products that allow for voice services to be
transmitted over
packet-based networks. A packet-based network delivers small amounts of
data, which tends to be more cost-effective and flexible than circuit-based
networks.

According to a study from Synergy Research Group, the market for voice
infrastructure (for voice over IP and Net offload) is expected to soar to
$19 billion by 2003. So far, Sonus has been able to snag an impressive list
of customers, such as Global Crossing and Williams Communications.

The lead underwriter is Goldman Sachs and the proposed ticker symbol is
SONS. The price range is $19-$21.

Digital Entertainment

In light of what’s happened at Digital Entertainment
Network (DEN),
what do you think of online entertainment?

Reply: Apparently, DEN has run out of money and is on the verge of a
bankruptcy filing. Although, DEN is somewhat of an exception for the online
entertainment industry. The company spent money wildly and did not have a
clear business model.

Inevitably, I think there will be convergence of the Web and Hollywood.
However, it will likely be driven by the Big Studies, not Net start-ups.
Producing high-end, movie-quality content is very expensive and high risk.
In fact, a flop can severely hurt even a major Hollywood studio. So, for
the most part, it would be a good idea to avoid the Net entertainment pure
plays.

M-Commerce: The Wireless Alternative

What is m-commerce?

Reply: We will be hearing more about this. Basically, it is mobile
commerce. That is, you can buy from a wireless device from anywhere,
anytime. For example, the Palm Pilot VII allows you to do such m-commerce
activities as buy stock and engage in online banking.

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