CARRIER ACCESS (CACS)

[Zaphod]

I may not be a trader
but one prediction already occurred. CACS bought Paragon today. I'm sure leakage helped drive the day, but I'm pretty sure there is more to come. $15 tomorrow, anyone?

Check this old article. I bet there will be more acquisitions to come.
http://www.forbes.com/forbes/2000/1030/6612184a_print.html.

I recall a cover story on Pierce pushing acquisitions some years back. Now that the stock is currency and decent companies are for sale cheap, it's a good time to shop.

More cash and more revenue means more development. More development next year means continued growth in 2005. This juggernaut is just getting started!

Zap

[Kirk]

$13...

I tried a trade... sold 5% of my shares at $11.80
bought 2/3rds them back at $11.05
set an auto sell for $12.05
wanted to turn it off this AM when it turned but it went up so fast that I only got $1 for those shares while it nearly made $2 in two days...

Amazing strength...

At least I FINALLY made some money trading it besides my very large long gains..

Kirk

[Zaphod]

Kirk, I'd like to do your numbers, but honestly I don't know how to do PEGs. I'd love to see the numbers and understand the rationale, though.

20% growth this quarter, plus another year of moderate growth, puts CACS at almost 40 million a quarter, equal to the historical best. Back then that was worth $50-65 a share. At 1/3 of that level now, it's still 16-20.

Of course, the rules are different now, but it still offers some clues about CACS performance. CACS grew faster than Nasdaq and the industry when things were good, and it dropped faster and further when they were bad. Plus, it faltered early. Perhaps CACS is and indicator and amplifier of the industry. As an access vendor, CACS would suffer fast when companies fail in their markets or customers shut their wallets, but would also enjoy rapid growth with new wireless builds or access expansion. Which of course is where we are now.

Zap

[Zaphod]

Looking back a few months, it appears that the pullback yesterday could easily be enough breath catching for another run. Maybe, though, it was just the holiday, with many professionals on the sidelines while nervous small fry took some profits and then triggered stop-loss selling, only to have calmer hand return it to normal.

Historically, the stock is about at IPO levels. In the heyday, it made a couple of easy doubles over a couple years. This company knows how to grow, and doubles or better for a few years is not impossible.

Also, though CACS has grown by a factor of 30 in one year, it dropped by a factor of 200 quickly as well, while revenue dropped only by a factor of 3 or 4.

Long and short of it, is that I don't think you can generalize this stock. Maybe you shouldn't generalize any stock. They are all managed by people, staffed by people, invested in by people, and products are bought by people, all of whom make decisions based on complex criteria. Saying the stock has to retrace 30%, or that 1% insider selling is too much, or that 3000% growth is overbought, holds zero weight with me.
Zap

[Kirk]

Up another 3% on another down day....

Run the numbers.

10-15% net margin in 9 months
20% growth next Q and 10% for each successive Q
I get about 50%
25M shares
calculate EPS
Assume 20% growth and
Give it a PEG of 1 and calculate price
Give it a PEG of 2 and calculate price.
I damn near fell out of my chair especially some value 50% growers much, higher.

[Zaphod]

Time value of money?

Does anybody have a mathematicaL model to predict the present value of a growing company over time?

We all know that CACS today, growing and posting profits, is worth more than CACS last year, losing money and shrinking.

However, the push down to $.30 obviously included a prediction of future failure, and the price today includes predicted success.

Equally obviously, any prediction carries risk, which decreases as time passes and expectation gives way to reality.

We previously predicted that CACS "should" be at $16. The market says $10.25. Obviously the market has factored in risk and unease for growth, and has discounted the possibility of product acquisition or increased organic investment.

How much will CACS appreciate, week by week, as the calendar unfolds? How long until we reach proper valuation? Of course the value is a moving target, as realized growth will give way to new predictions.

I think one more quarter of solid numbers will erase most doubt. If that means we should see $15-$16 in February, might it not be reasonable to see $1 per month growth through January, with a $2 or $3 bump up again at earnings?

What if CACS invests some of the $30 million into new products? Couldn't the rainy-day fund turn into a war chest, now that the clouds are clearing? $30M, plus some stock, would enable some solid acquisitions. That would be great for us long-term value investors.

I think I'll increase my personal 1-year valuation to $20-$25. I see few risks and plenty of opportunities to succeed.

[Zaphod]

More CACS publicity.

http://www.lightreading.com/document.asp?doc_id=42456

[Zaphod]

Another great day -- better even than my optimistic view. Happy Thanksgiving and Merry Christmas early this year!

I hesitate to bet on another rise going into a Friday, especially in Oct., but I just don't see any weakness yet.

Tons of shares are changing hands, as by now even some recent investors can't pass up a 50% gain in two days, but more buyers remain. Maybe our $16 value projection is real?

I'll bet the same for tomorrow as today, just for fun. More volatility but a run past 10.50 before settling around 10. I just don't see a pullback below 8 like some predict. I think down to 9 is possible, though I wouldn't put money on it. I could see 12 as equally likely. I think anybody who shorts this stock is silly. How can you call it overvalued?

Honestly, I'd like to see next week flat, then back to a buck or two growth per month. Slow and steady long-term growth is fine by me.
Zap

[bbgold]

Sounds Good Kirk!
I hope that it does indeed continue to be Exciting for you. I would not use the money for buying on pullbacks but rather look for another opportunity, or use it for spending money. You have definitely earned a reward for your perseverence.
Enjoy the Evening Kirk! :^)

[Kirk]

I took my 2nd 5% off the table at $9.90 (just in case it didn't make $10) after another 20% gain today. Often these hard numbers (10,20,30) can be tough to drill through. Now I have 10% of my shares sold in total. I'm up HUGE on this. I want to use the funds from this sell to trade or buy any pullbacks. Now you see why I didn't want to do any profit taking at lower levels.... it was very under valued.

Hmmm...closed over $10. That is very positive. If we get another big white candle tomorrow, then this could just be the start of something very exciting (not that over 20x YTD is not already exciting) -g-

[bbgold]

Thanks for the link Kirk
I would not be surprised to see a 50% retrace of this move from 6-10 settling at $8, JMHO though. I hope it keeps Rocking for you! :^)

[Kirk]

Kevin Smith's 8/30/03 Chart for CACS

Note date and 38% fib retrace resistance at 24.47



All his charts http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID424273&cmd=show[s14490504]&disp=...

[bbgold]

Glad to hear WCOM losses were recovered
Yes, it is often hard to tell from a balance sheet what is Real and what is Not nowadays. Your DD on CACS certainly has paid off.

I would look for at least $8 to hold support here, looks like another gap up there at 9:42 this morning.

Nothing wrong with taking some profits and spending them on Something.
Enjoy the Day Kirk! :^)

[Kirk]

The only time I have seen Paul Kangas mention a stock I owned on TV was back in 1988. And that time it was because it was the Big Loser of the day <GG>.

LOL. When I started to dollar cost average into CACS, I also was DCA'ing into WCOM. I thought these were two under valued telecoms with great balance sheets. We soon learned that WCOM was lying about its balance sheet. (Sheet happens!) It was no fun to hear Kangas talk about WCOM. Lucky for me, I made back my WorldCom losses on CACS long, long ago. -GG-

As for targets, it gets scarry to think about it because the company was so under valued compared to others in the same or similar market space. I think they needed to prove themselves and they passed the test. I think the two analysts that have been following it are small money managers. I might not take significant profits until I hear some major analysts following the stock and asking questions at the conference calls.

But... I might take another 5% off to try and trade. trading around a core stock you like for long term gains can be profitable. Worst case you either get stuck with your shares or left behind with cash from selling at a great profit. Neither is "bad."

[Kirk]

The only time I have seen Paul Kangas mention a stock I owned on TV was back in 1988. And that time it was because it was the Big Loser of the day <GG>.

LOL. When I started to dollar cost average into CACS, I also was DCA'ing into WCOM. I thought these were two under valued telecoms with great balance sheets. We soon learned that WCOM was lying about its balance sheet. (Sheet happens!) It was no fun to hear Kangas talk about WCOM. Lucky for me, I made back my WorldCom losses on CACS long, long ago. -GG-

[bbgold]

Hi Kirk
That 9.98 on the previous chart might just get hit today. Moving above $10 could easily send it into the stratosphere. The volume the last two days has been Huge. It is nice to see a stock in Momo mode while the rest of the markets are in Nogo mode.

The only time I have seen Paul Kangas mention a stock I owned on TV was back in 1988. And that time it was because it was the Big Loser of the day <GG>.
Keep Rocking Kirk! :^)

[Kirk]

The gap up from 6 on CACS was amazing. I have still just been watching it as it keeps triggering new 52w highs. Have you ever taken any profits on it?

I sold 5% of my personal shares at $6.75 (and 10% of my newsletter position) as it seemed to be running out of gas and I figured if I sacrificed a virgin to the investment gods I might give the stock a kick in the pants.

I nearly bought the personal shares back at $5.85 but I got greedy and was hoping for a 20% correction. If they could have delayed the earnings announcement a few days, I would have gotten it with the rest of the market correcting these last few days.

Congrats on finding a Great Diamond Kirk! :^)

Thanks! Sometimes it is hard to believe the hard work paid off so well. It was cool seeing Paul Kangas on TV show a plot for this stock. Less than a year ago my critics where beating me over the head with this stock as I kept buying.

BTW, I think it has a long ways to go yet, but it will not be in a straight line.

Kirk

[bbgold]

Nearing a Profit target IMO
Here is one of your previous charts as I was catching up on the board. Congrats Kirk! :^)

[bbgold]

Morning Kirk
The gap up from 6 on CACS was amazing. I have still just been watching it as it keeps triggering new 52w highs. Have you ever taken any profits on it?
Congrats on finding a Great Diamond Kirk! :^)

[Kirk]

Motley Fool Article
http://biz.yahoo.com/fool/031022/1066846800_1.html

Motley Fool
Carrier Access Plugged In
Wednesday October 22, 2:20 pm ET
By Dave Marino-Nachison



Telecommunications equipment maker Carrier Access (Nasdaq: CACS - News) is one of today's hot stocks, rising more than 25% at last check after the company reported its third consecutive quarterly net profit and Q3 revenues that rose significantly both sequentially and year over year.

Boulder, Colo.-based Carrier Access supplies telecommunications companies -- including ISPs, competitive carriers, wireless service companies, and others -- with a wide range of equipment, largely through reseller agreements. Among its top customers in 2002 were reseller Walker Associates and direct customer XO Communications.

The company's press release discussed a number of research, product, and marketing themes Carrier Access hopes will help the business continue to perform as it has this year. (Investors also hope so -- the stock has greatly outperformed the S&P 500 over the last 12 months, though it certainly had fallen quite a bit before beginning its turnaround.)

A close look at its income statement over the last three quarters (including the one reported today) shows why investors are plugging back into Carrier Access. It is reporting a net profit again thanks to top-line growth as well as cost management in both the R&D and SG&A departments. Sales have grown while inventory has fallen -- good news considering the still-shaky state of the telecom supplier business. Carrier Access has turned in some $5.4 million of free cash flow -- an encouraging sign especially for a company with a debt-free balance sheet.

The uncertainty surrounding Carrier Access' end users hasn't gone anywhere -- most are still fighting a running battle against debt on one side and the competition on the other. This doesn't always leave a lot of room to purchase technology, especially if it can't be shown to provide improved performance and cost efficiencies to a telecom and/or its customers. Given the shares' recent run, investors clearly believe Carrier Access is one company that delivers.

Dave Marino-Nachison can be reached at [e-mail].

[Zaphod]

Roger and Nancy are ever the same. Remember they've seen it 8 times higher than this, and want to see it higher still. This is but one welcome step on a long, difficult road, and a road they've traveled twice already; once going up and once going down. I'm sure they're glad to see the rise because it gives them more options and choices, but I doubt they cut out early to tip a few cold ones just because they picked up 50M today.


There is another upside opportunity, which is growth through acquisitions. Now that the stock is a solid currency, it would be possible to pick up struggling or defunct company assets. That's not always good, as we all know that bad companies die for a reason, but after this long downturn there are some good companies dying as well.

Any other exuberant speculations?

I like your Rambus comparison. I doubt this will behave as nicely, but I'm bullish on mostly up and little down from here. 12's this quarter would be astounding, though, as it would take two more moves like today.

[Kirk]

I took a look at Rambus to see how it behaved after two very good pieces of news.



Rambus more than doubled in Feb over what looks like 3 days then it traded in a range until the next bit of news a few weeks that nearly doubled it again.

So my guess would be a trading range between 8 and 12 for the next quarter... but guesses are just guesses. I think a case can be made for higher and a correction could happen anytime too.

Funny to have my single largest position go up over 35% in a single day... That has never happened before. I wonder if Roger and Nancy, who own many million of the shares and run the company, are celebrating tonight?

[Zaphod]

So now we're at $8.

The question is, will it continue up or drop back down tommorow? Normally I'd bet the latter, but the upward pressure all day with huge volume seems to be shaking out profit-takers without dampening the trend.

Looking back over the year, it's been a steady trend up. Guidance to continue up says we've now re-filled the drop from the past few weeks, and can probably continue growth.

Once the money turns over from profit-takers and insiders to new money, which might take a few days, I bet we're back to about $1 per month growth. Maybe we'll see 7.50 or even 7.00 again in the next few days, but I doubt it. I think we'll see some volatility like always, but will see spikes to 8.50 tomorrow and close the week above 8 as well. Investors and shorts can't believe 2000% and there is still room to grow, so emotions to sell and take profits is strong and understandable. But the numbers don't lie, and the growth is real, so the stock value must increase.

Who'd go for 9 at Thanksgiving and 10 by New Years?

[Kirk]

Nope, SellKirk is not me. Don't even know who MadJacks is.
Congrats on the double.
K

[Captain Crunch]

Kirk, would you happen to be the "SellKirk" at MadJacks?????? Just a shot in the dark, but thought I would ask. I have a very small position in this one, but have doubled my money on it in a few months. Good Luck

[Kirk]

$8

Well, we hit my $8 number... on a big, down day in the market. -snort

Can we hope for double digits or am I being greedy? -g-

[Zaphod]

I see your point.

I believe CACS is a solid play to $250M. Last upswing they hit $100M+ with the processes of a $25M company, which just about ripped the seams. CACS wasted money and barely managed to build enough product to ship what with production and yield issues.

Then they retrenched, got major contract manufactures, did some real design-for-manufacturing, and staffed for $200M going up.

Then the bottom fell out. After years of cuts some gains have fallen by the wayside, but yields are good, designs are sound, and most of the remaining issues are due to thin staffing (which is easy to fix if revenue allows growth). Overall efficiency is good. The clothes are just baggy now.

With a few months of lead-time the CMs could crank out any quantity of product, and I believe the mgmt team can manage to $150M-$250M well this time around. $1B I'm not so sure about, but by the time we're up 10x I'm not sure I'll care!
Zap

[Kirk]

Thanks. We got the same answers. Must be cheaters. -snort!

There is no way this stock will grow 20% per quarter though.

20%% is the growth rate I use for ANNUAL GROWTH. Remember it came after the 4x factor. I use it for all tech stocks even if they are CISCO showing 60% growth and Chambers is on TV promising 30-60% for the next 5 yrs (which he did predict in 2000 and I remember thinking all the Chinese would need their own router for that to occur.) The cost to grow gets expensive as a company goes from $10M to $100M to $1B. The infrastructure a company needs to grow changes at certain sizes. I don't recall the sizes but CACS will be much changed if it gets to $200M a year run rate.

Agree on the price/sales and price/book vs the competition. There is a big reason this is my largest holding. I'll tell you it took some time to find a comany in the right market space that had a clue how to manage a balance sheet! :)

[Zaphod]

Kirk,
Revenue of $15.9M
Assume 20% growth next Q then three Q's of 10%
19.08, 20.99, 23.09, 25.40
Give them ONLY a 10% net margin (they said 15% in 9 months is possible)
2.54M
24.8M shares
.10/share
get a quarterly earnings
multiply by 4 for a yr
.40/share
give it a p/e of 20
what does that give?
8.0
Then discount it for 20% growth (nobody can grow at 50% for long) for a PEG of 2 (multiply by 2)
What do you get?
$16
I think that is fair value TODAY.
upside is 15% margin and more growth for larger PEG.

Looking at price/sales versus competitors says the same thing.
CACS 3.37 versus ADTN 7.15 and AFCI 6.63. Assuming a solid return to profitability, a double is not unreasonable, and then 50% more assuming forward numbers instead of ttm (the Yahoo stats are trailing at least 30% low already!). That's about $16, too.

There is no way this stock will grow 20% per quarter though. It will either flatten to match the market it's in very quickly, because only so much new market share can be captured, or it will accelerate as new products catapult the company to new markets.
Zap

[Kirk]

Check my math....
Revenue of $15.9M
Assume 20% growth next Q then three Q's of 10%
Give them ONLY a 10% net margin (they said 15% in 9 months is possible)
24.8M shares
get a quarterly earnings
multiply by 4 for a yr
give it a p/e of 20
what does that give?
Then discount it for 20% growth (nobody can grow at 50% for long) for a PEG of 2 (multiply by 2)
What do you get?
I think that is fair value TODAY.
upside is 15% margin and more growth for larger PEG.
-snort

[dvdmogul]

Thinly traded stocks been very very good to me....

but I too am completely happy with CACS performance.

My targets are more aggressive than yours, the float is wound tight as it is, makes for some compelling moves.

[Zaphod]

I know it's only money, but it really is more fun when it's MY money instead of some bashing shorter making bucks.

It will be interesting tomorrow. I'm not sure we can see my earlier prediction of $8, but I am pretty sure we'll see $7. What do others see?

I suspect some of the good news is already priced in, but some of the fund investors on the call seemed to be almost giddy, so I suspect the news was better than anybody expected.

Something like 30% growth this quarter, conservative guidance for double-digit growth next quarter (and they do ALWAYS try to be conservative), and guidance for better margins, new products, and returns to normal profitability. I think 10's by New Year's is still not unreasonable.

I like the bashers on Yahoo commenting about the market targets that are a year or two stale and trailing estimators. I can't imagine investing in thinly traded stocks based on what you can find on Yahoo. But then, I generally can't see investing based on analyst comments at all!

[Kirk]

Carrier Access Reports Third-Quarter 2003 Financial Results
Press Release Source: Carrier Access Corporation
Tuesday October 21, 4:00 pm ET
Revenues Grow 31% Sequentially
Company Achieves Third Consecutive Quarterly Profit


BOULDER, Colo.--(BUSINESS WIRE)--Oct. 21, 2003--Carrier Access Corporation (Nasdaq: CACS - News), a leading provider of broadband access solutions, today reported its financial results for the third quarter ended September 30, 2003.

Revenues for the third quarter of fiscal 2003 were $15.9 million compared with $12.2 million for the second quarter of fiscal 2003 and $10.5 million for the third quarter of fiscal 2002. Net income for the third quarter of fiscal 2003 was $702,000 or $0.03 per diluted share compared with a net income for the second quarter of fiscal 2003 of $122,000 or $0.00 per diluted share and a net loss of $14.9 million or $0.60 per diluted share for the third quarter of fiscal 2002.

Revenues for the first nine months of fiscal 2003 were $39.3 million compared with $38.8 million in the same period last year. Net income for the first nine months of fiscal 2003 was $941,000 or $0.04 per diluted share compared with a net loss for the first nine months of fiscal 2002 of $44.6 million or $1.80 per diluted share. During the first nine months of 2003, the company recovered significant amounts of aged receivables, and accordingly changed its estimates for allowance for doubtful accounts.

"This was a great quarter for Carrier Access, our third consecutive quarter of revenue and net income growth," said Roger Koenig, president and CEO, Carrier Access Corporation. "We are clearly executing our plan to return to profitability and to increase our revenue through diversification of our customer base with the introduction of new products. Our third-quarter results demonstrate our progress as revenues grew 31% sequentially to $15.9 million, reflecting increased market demand for our wireless, integrated business services, Voice over IP (VoIP), and fiber solutions. Our investments in research and development over the last two years are now showing returns as we continue to deliver new applications to new customers. As a result, we believe we are gaining momentum and market share in our target access segments.

"The third quarter was particularly significant for us in the wireless market. We believe that our success is due to a continuing wireless carrier focus on cell site efficiency, improving remote management, upgrading sites for E911 compliance, and providing packetized traffic for 3G migration. In June of 2002, we introduced the Axxius(TM) 800 platform as part of our market diversification strategy and we are now recognizing the benefits of that investment with 28% of our Q3 revenue generated from sales to the wireless market. We intend to continue our development efforts in this area to enable wireless carrier customers to migrate to new packet-based solutions for even greater operational efficiencies.

"In addition to gaining momentum in the wireless market, earlier this month we announced successful trials and a strategic partnership for fiber-to-the-premises (FTTP) deployments. Our product development of the Exxtenz(TM) Business Optical Network Terminal (B-ONT) began to pay off as well as in the third quarter as we recognized our first meaningful revenue for this new access technology. We are clearly delivering results on our investment in packetized access technologies that are designed to lower the cost of delivering new broadband services to businesses and end users. During the third quarter, we added new features to our Adit® 600 platform, and successfully trialed new VoIP features for international customers. We are seeing increased demand for our Adit 600 platform both for traditional voice deployments and for VoIP applications. We are extremely encouraged by our customers' adoption of the Adit 600 platform.

"According to market analysts, network edge spending overtook core spending in 2001 and they predict that during 2004, edge expenditures will outpace the core by 3 to 1. Our plan is to continue our research and development efforts in market-disruptive technologies and take advantage of the shift in spending towards packet-based access solutions. We believe we can take advantage of this shift as our products support both traditional circuit-based telephony and packet-based solutions. We believe we are very well-positioned to deliver the cost-effective solutions required by service providers at the edge of the network.

"In summary, we are very pleased with the results of our third quarter. We believe that we are demonstrating the results of the strategy that we put in place over the last two years."

Carrier Access will hold a conference call today at 4:30 p.m. EDT to review these results. The call is open to the public. Those who wish to participate should dial 415-228-4835, domestically or internationally, at least fifteen minutes prior to the scheduled start time for the call, and reference Carrier Access.

Carrier Access has also scheduled this event to be broadcast live via web cast and replayed until 5:00 p.m. EST, December 7, 2003. To access this web cast please go to the Investor Relations page at www.carrieraccess.com/investors, or www.companyboardroom.com.

 
 0-  
  
                       CARRIER ACCESS CORPORATION 
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 
                (in thousands, except per share amounts) 
  
                                     Three Months       Nine Months 
                                        Ended              Ended 
                                     September 30,      September 30, 
                                    2003       2002    2003       2002 
                                    ----       ----    ----       ---- 
  
 Net revenue                       $15,927    10,534 $39,286    38,787 
 Cost of goods sold                  9,169     6,342  22,010    25,851 
                                   -------    ------ -------    ------- 
  
   Gross profit                      6,758     4,192  17,276    12,936 
                                   -------    ------ -------    ------- 
  
 Operating expenses: 
    Research and development         2,525     5,283   7,638    20,069 
    Sales and marketing              2,763     4,157   8,183    14,186 
    General and administrative       1,277     1,675   3,842    10,492 
    Bad debt expense (recoveries)     (423)        7  (2,981)    3,060 
    Asset impairment charges             -     8,995       -     8,995 
    Other intangible amortization        -        72       -       216 
                                   -------    ------ -------    ------- 
  
 Total operating expenses            6,142    20,189  16,682    57,018 
                                   -------    ------ -------    ------- 
  
 Income (loss) from operations         616   (15,997)    594   (44,082) 
  
 Other income, net                      86       128     258       592 
                                   -------    ------ -------    ------- 
  
 Income (loss) before income taxes     702   (15,869)    852   (43,490) 
  
 Income tax expense  (benefit)           -    (1,016)    (89)    1,142 
                                   -------    ------ -------    ------- 
  
 Net income (loss)                    $702  $(14,853)   $941  $(44,632) 
                                   =======    ====== =======   ======== 
  
  
 Income (loss) per share: 
   Basic                             $0.03    $(0.60)  $0.04    $(1.80) 
   Diluted                           $0.03    $(0.60)  $0.04    $(1.80) 
  
 Weighted average common shares: 
   Basic 
                                    24,807    24,766  24,787    24,753 
   Diluted 
                                    25,952    24,766  25,619    24,753 
  
 -0-  
  
                       CARRIER ACCESS CORPORATION 
           CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) 
                (in thousands, except per share amounts) 
  
                                        September 30,     December 31, 
                                            2003              2002 
                                        -------------     ------------ 
 ASSETS 
 Current assets: 
  Cash and cash equivalents                  $14,166           $14,900 
  Marketable securities available for sale    17,020            10,828 
  Accounts receivable, net                    12,664             8,598 
  Other receivables                            1,107               174 
  Income tax receivable                           83             6,989 
  Inventory, net                              23,694            24,134 
  Prepaid expenses and other                   1,039             1,024 
                                             --------         --------- 
  Total current assets                        69,773            66,647 
  
 Property and equipment, net of accumulated 
  depreciation and amortization                7,049             9,462 
 Other assets                                    345               328 
                                             --------         --------- 
  Total assets                               $77,167           $76,437 
                                             ========         ========= 
  
 LIABILITIES AND STOCKHOLDERS' EQUITY 
 Current liabilities: 
  Accounts payable                            $6,412            $5,437 
  Accrued expenses and other liabilities       3,587             4,886 
                                             --------         --------- 
  Total current liabilities                    9,999            10,323 
  
 Stockholders' equity: 
 Preferred stock, $0.001 par value, 5,000 
  shares authorized and no shares issued or 
  outstanding at September 30, 2003 and 
  December 31, 2002                               --                -- 
 Common stock, $0.001 par value, 60,000 
  shares authorized and 24,834 shares issued 
  and outstanding at September 30, 2003 and 
  24,771 shares issued and outstanding at 
  December 31, 2002                               25                25 
 Additional paid-in capital                   85,861            85,785 
 Deferred compensation                           (20)              (65) 
 Accumulated deficit                         (18,702)          (19,643) 
 Accumulated other comprehensive income            4                12 
                                             --------         --------- 
  Total stockholders' equity                  67,168            66,114 
                                             --------         --------- 
  
  Total liabilities and stockholders' equity $77,167           $76,437 
                                             ========         ========= 
  
 -0-  
  
                       CARRIER ACCESS CORPORATION 
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
                             (in thousands) 
  
                                                     Nine Months Ended 
                                                        September 30, 
                                                     ------------------ 
                                                        2003      2002 
                                                        ----      ---- 
 Cash flows from operating activities: 
 Net income (loss)                                      $941  $(44,632) 
 Adjustments to reconcile net income (loss) to net 
  cash provided (used) by operating activities: 
   Depreciation and amortization expense               2,951     4,678 
   Provision for (recoveries of) doubtful accounts, 
    net                                               (2,981)    3,060 
   Provision for inventory obsolescence                 (212)    2,608 
   Stock-based compensation                               70       169 
   Asset impairment charges                                -     8,995 
       Deferred income tax expense                         -     7,318 
       Changes in operating assets and liabilities: 
        Accounts receivable                           (1,086)    6,307 
        Notes receivable                                   -      (775) 
        Income taxes receivable                        6,906    (4,211) 
        Inventory                                        652     9,233 
        Prepaid expenses and other                      (970)      784 
        Accounts payable and accrued expenses           (323)   (5,201) 
                                                     -------- --------- 
                 Net cash provided (used) by 
                  operating activities                 5,948   (11,667) 
                                                     -------- --------- 
  
 Cash flows from investing activities: 
 Purchases of property and equipment                    (532)   (1,611) 
 Purchases of marketable securities, gross           (14,208)   (8,245) 
 Sales and maturities of marketable securities         8,007     7,259 
                                                     -------- --------- 
                 Net cash used by investing 
                  activities                          (6,733)   (2,597) 
                                                     -------- --------- 
  
 Cash flows from financing activities: 
 Proceeds from exercise of stock options                  51        14 
                                                     -------- --------- 
  
 Net decrease in cash and cash equivalents              (734)  (14,250) 
 Cash and cash equivalents at beginning of period     14,900    24,741 
                                                     -------- --------- 
 Cash and cash equivalents at end of period          $14,166   $10,491 
                                                     ======== ========= 
  
 Supplemental cash flow disclosures: 
 Cash received for income taxes                       $6,995    $1,449 
                                                     ======== ========= 
  
  
  
 --- 
 Contact:  
      Carrier Access Corporation 
      Jane Salance, 303-442-5455 
      Fax: [phone] 
      [e-mail] 
      www.carrieraccess.com 
 

[Kirk]

Conf Call Notes

30% growth this Q
10-20% revenue growth next Q
10 to 15% net margins perhaps in 9 months
current net margin was 4.42%

I sold 5% of my shares at $6.75 thinking they were either a sacrifical virgin to the market gods or a hope to buy back in low $5's.... I think they are gone forever. -g-

Funny, this kind of growth is just as hard to manage as it was when negative, but the stocks price is so much more fun if you are long. -g-

[dvdmogul]

Agree, this news rivals AUDC's news of their relationship with Northern Telecom; the RBOCS are long term customers of Alcatel. Alcatel has a deep and abiding relationship with key RBOC managment. The fact that the reports on trials have went very well, could really place some momentum behnd this. The RBOCS absolutely are playing catch up, I've been waiting for some news on this front. The news is a double whammy. The fact that a PONS Solution is whats being developed and favorably accounted for by trial, removes two other investment candidates from a short list of fiber solutions players. As I said previously, CACS management did a very good job in the last CC, better than their peer group by far in detailing the paths of the various initiatives. This seems to validate that.

[Kirk]

HUGE news... I wonder how many actually have a clue? :)

http://www.suite101.com/discussion.cfm/investing/43383/854886


Latest Press Release

Alcatel Teams with Carrier Access to Accelerate BPON FTTP Deployments

Companies announce inter-operability between PON product lines; Joint solution receives high marks at multiple beta customers

BOULDER, COLORADO - October 7, 2003 -

Alcatel (Paris: CGEP.PA and NYSE: ALA) and Carrier Access (NASDAQ: CACS), today announced the completion of interoperability testing between the Alcatel 7340 fiber-to-the-user (FTTU) passive optical network (PON) product line and the Carrier Access Exxtenz optical network terminal (ONT) for business applications. The testing completion underscores both companies’ commitment to delivering standards-based solutions that are interoperable in multi-vendor environments.

By making their products interoperable, Alcatel and Carrier Access are providing operators with greater flexibility and increased product choices, thereby strengthening the value proposition of fiber-based broadband network technologies.

“This is a milestone in the evolution of PON development that will foster market competition among vendors and contribute to large-scale deployment,” states Matt Davis, director broadband access technology, with the Yankee Group. “Interoperability presents operators with more flexibility when assessing their vendor requirements in different areas of the network and allows them to choose best of breed solutions.”

Both the Alcatel and Carrier Access equipment is based on the ITU-T G.983 broadband PON (BPON) standard, and the combination is a first in the industry. The combined solution has been installed with initial beta customers and has received high marks for quality and performance. The solution is now generally available.

“The ONT is a crucial element in driving deployments of BPON access technologies, and the interoperable approach allows Alcatel to take a leadership position in delivering FTTU solutions as the market evolves,” said Mark Klimek, senior director of marketing and business development of FTTU at Alcatel. “We’ve demonstrated support for standards-based access solutions in the DSL arena, and we’re now carrying this forward in the fiber-access market. Carrier Access is an important partner in this effort.”

“We began R&D investments in BPON approximately three years ago, with the purpose of integrating low-cost fiber access for businesses services,” said Roger Koenig, CEO and president of Carrier Access. “Our early success with beta customers and the growing customer activity in the RBOC, IOC and municipality segments confirms the maturity of our complete fiber access solution for Ethernet, Voice, T1, and Video business services that we have delivered with Alcatel. Our joint BPON solution provides a significant step forward in using low-cost fiber to economically deliver a full suite of broadband services to business and government customers.”

The testing with Carrier Access underscores Alcatel’s commitment to interoperability, while complementing the company’s existing fiber access portfolio, which consists of the Alcatel P-OLT, H-ONT, B-ONT and AMS. Teaming with Alcatel offers Carrier Access an opportunity to expand its robust portfolio of solutions for business users and seize new opportunities in the emerging PON market, and deliver economically sound fiber-based access solutions to business users.

RBOC: Regional Bell Operating Company
IOC: Independent Operating Company
P-OLT : PON - Optical Line Terminal
H-ONT : Home – Optical Network Terminal
B-ONT : Business – Optical Network Terminal
AMS : Alcatel Access Management System

About Alcatel

Alcatel provides end-to-end communications solutions, enabling carriers, service providers and enterprises to deliver content to any type of user, anywhere in the world. Leveraging its long-term leadership in telecommunications network equipment as well as its expertise in applications and network services, Alcatel enables its customers to focus on optimizing their service offerings and revenue streams. With sales of Euro 16.5 billion in 2002, Alcatel operates in more than 130 countries. (www.alcatel.com)

About Carrier Access

Carrier Access manufactures broadband access and service delivery platforms for both landline and wireless communications carriers. Our solutions enable our customers to expand service revenues, lower operating costs, and extend capital budgets. Founded in 1992, Carrier Access has delivered more than 3.0 million voice and data lines for customers in North American and International markets. The company focuses on broadband access from central offices to customer premises, next-generation wireless transport and data infrastructure, and enterprise service delivery. Carrier Access products meet and exceed the highest industry interoperability, reliability, and quality standards; including Telcordia® OSMINE, NEBS Level-3, and ISO 9001. For more information, visit www.carrieraccess.com.

[Zaphod]

The doldrums appear to be short this year. Is too much news leaking early this time?

This segment, the telecom access market, is hot. Compare: ADTN is still posting gains despite relatively high valuation. CACS should be performing similarly. I guess it arguably already has been; CACS is up by a factor of 15 or more for the year. It's hard to believe it still has growth room, but I argue that it can still almost double again just on fair valuation. I think 2x by early 2004 and maybe 3x by the end of next year is possible.

Kirk, I think your numbers are conservative. I'd guess 8's without much pull-back this cycle, and testing 10 by New Years.

[Kirk]

Above $5 now on good volume

>

My TA says this should go to $7 or $9 if it can break and close above $5 on good volume. It might run then come back to test $5 from above... that would be somewhat expected, but it could just run like crazy if it completes this ascending triangle pattern.

I think $8 is not a bad price for a target just on fundamentals... and if they have a good announcement this quarter.... institutions might start buying again.

As the posts here confirm, I've been long all along but if you buy now on the $5 break, you might want a 10% stop for protection.

This chart will get really exciting if it breaks this triple top by hitting $5.50



Free Issue of my newsletter where I cover CACS in more detail:
http://home.netcom.com/~kirk_69/Savvy/Promo/WhatLetter2Buy.html

[Zaphod]

Now comes the fun time. We'll see the doldrums as everyone waits for the quarter's results, at least until speculation begins or news leaks. Then we'll see some solid movement.

Will there be a surprise? If so, will leaks and speculation overstate the reality (so you should buy the rumor, sell the news), or can you wait for the published results before determining your action?

If modest growth occurs (say breakeven plus a bit), what will be the reaction? Is CACS still depressed (it appears to be versus AUDC and ADTN), or is a growth expectation already priced in?

It would be great to see a 20% bump on growth and another 2x multiplier on a anti-depression correction. Could that happen?

[Kirk]

I don't think the volume is enough to even try.. I thought I migh try and sell a few at a bump above $5 but that might be the one that runs... so it seems safer to look for a 20% lower entry point to play a scalp for 20% on the long side... but the bid/ask spread today at the close was enough to turn a third white candle into a dark one... 20¢ spread when you are trying to get maybe a 60¢ scalp... not worth it.

Still long and strong.

Kirk

[Zaphod]

It's a short-term stuck I think, and indeed a good cycle to catch some quick profits, if you're nimble and perhaps a bit lucky.

The past charts tend to show such cyclical behavior as the quarter comes to an end, as the investors try to predict how the quarter will end. It certainly appears that you could often make fairly predictable money by watching for a short-term peak in the second month of the rise, selling well above the trend line, and then buying again in the next trough.

Of course, if past history holds, when decent or good news comes out, the stock will continue to post new highs, and you risk selling before it swells again. Perhaps the safest approach would be to hold through the next earnings report, ignoring the typical daily cycles, and waiting for an overbought peak in about 2 months? Assuming slow growth across the market, there might well be couple of more quarters of similar behavior.

Or do you think you can even play the smaller oscillations that this stock seems to perpetually exhibit? I'm not sure the weekly spread is enough to make much money without trading so many shares that you drive the price yourself!

[Kirk]

Stuck between $4 and $5 or a double top?

It seems if you are good at scalping from the market makers, you could sell some near $5 and buy back under $4.40 and do pretty well the last month.



I've plotted the 25 and 50 DMAs.

It seems profit taking time is when you get above the blue line an amount equal to the red line to blue line distance then you buy back when it touches the blue line again. Of course, it will run to $20 as soon as I try this trick!

[Kirk]

Chart of AUDC vs CACS

[dvdmogul]

I have been corelating the trade behavior of AUDC versus CACS;

After the last conference call I rotated out of 95% of my AUDC position into CACS, the company is trading at near 4 bucks less than AUDC, the performance during the QTR last favored CACS, in addition of the seven conference calls I listened to in this VOIP group, CACS was by far the best. CEO had a strong handle on the direction of the market and was prepared way beyond the others. AUDC is being propped by its Nortel win, but those deals are always subject to delay and the small contractor gets hosed a good part of the time.

Right now CACS is starting to move, we are 4 bucks behind AUDC, yet we have a more precious float, better numbers and guidance. Lets hope we make up some ground in the coming weeks. CACS is the better value by far.

[Zaphod]

Well, that was interesting.

Looks like you were right, Kirk, and I was overly optimistic. It seems to me like the market viewed the customer space as a conserved quantity, and so when Adtran went up, CACS had to go down. Adtran going up is not surprising, as it was well down from recent highs with no substantive change (I said it was a decent value just yesterday).

The idea of a squeeze play isn't odd, either, since Vina was squeezed out over the past year by Adtran, CACS, and others (which helped fuel the recovery of the current players over recent quarters).

However, this time I think the situation is different. Adtran's projection today pushed it back up from undeserved lows, and dropped CACS back a month or two on it's curve, instead of raising it to match. Judging from the volume, the skittish market gave CACS an initial push, and then stop-loss selling and jumpy traders catching remaining profits added momentum. Assuming a "rising tide" instead of a squeeze play, the recovery for CACS should be abrupt and large when the market figures this out. It's a screaming value if this is indeed the case.

Zap

[Kirk]

Adtran had good news.
Market is taking it as a reason to sell this off.

$5 is/was a major resistance point.
Get above $5 and hold for awhile and major institutions might start to get interested.


Probably a good buying level now...

Decline is similar to the mid July decline. That 20 DMA line has been a good buy point in the past. I'm just kicking myself for missing opportunity to take profits when it hit the upper end of its uptrend band.... as I'd buy the shares back today if I had sold them at $5.

[Zaphod]

Not sure what to think of AUDC. Their technology is decent, but the key components (voice codecs) are becoming commodities. I'm not sure they have the skills to turn technologies into market-accepted products.

At the risk of over-generalizing, I think their focus on technology will stand them in good stead for the nascent phase of VoIP. but soon we'll be past early-adoption and into commodity markets, and they'll suffer against newer, more nimble opponents.

I give them 12 months of growth, then stagnation as next-gen tech completely over-runs their space. Key indicators will be their succeses in the PON and cable markets.
Zap

[Zaphod]

It amazes me still.........
What drivel people put on boards, either because they believe it, or they hope somebody else believes it. Yahoo CACS is a good example of hype and bashing. Hopefully I'm not a similar example here!

Posters claim insider selling by Roger as a big indicator of coming problems. From what I gather, any recent sales are less than one percent of his holdings. Given that at one point his CACS holdings were almost a billion dollars, and he didn't sell much then, I think any selling now (after a couple very lean years) is natural and prudent. When was the last time you lost $.5B+ in your portfolio?

More importantly though, is the way Roger runs the company. With so much influence, much of the chances of success ride on his decisions. Moreso than at Adtran, where the prime stockholder/exec sold 1/3 of his holdings (when retiring) but caused little stir in the price or the operations. Adtran is a plodding company that rose slowly on the bubble and fell slowly on the implosion. It's still a decent value today, armchair brokers notwithstanding.

However, for speculative value you can't beat CACS, where the dice rolls are quick and the ante is hefty. CACS was a canary for bad times last go-round -- it was crashing before the industry at large even recognized the signs of doom. With luck, maybe it'll be a phoenix instead this time, and rise as quickly as it crashed?
Zap

[dvdmogul]

Agree Zap...which telecom provider hasnt experienced inventory write downs? Some are horrendous, CACS has been modest in comparison.

CACS has the sweet spots covered by pursuing R&D aggressively. I am benchmarking them in a group of companies to include AUDC. After the last CC I felt that CACs managment showed better command of the business issues of this group than all the others combined.

So far I am very satisfied with CACS ability to arrive on the playing field Fit to compete, you generally cant say that about all these companies rushing to get in this space via news release, without the necessary preparation.

[Zaphod]

CACS is 1.88 Price/Book, 2.07 Price/Sales. Adtran (ADTN), in the same general space, is 4.16 and 5.72, respectively.

Historically, ADTN is more conservative (and larger and more diverse) than CACS, and tends to succeed less aggressively when times are good (99 thru 2000), and suffers much less when times are bad (compare mid-2000-2002). I submit that we're now hitting better market times, and CACS is doing comparably well (check out six-month charts side by side).

Is there an easy way to check P/S and P/B for both at previous peaks (2000)? I think if times stay good, we'll see CACS beating Adtran's ratios next year. To me, that leaves room for easy 2x, and maybe 3x value growth, on top of organic sales growth.

Comments on the Yahoo board worry about inventory. I think that if the company is growing and product mix is healthy, an inventory write-off on slow-movers could hurt a quarter, but won't much hurt the company. Assuming expenses stay flat, or grow slowly, even a small uptick in Sales per quarter will quickly cover the "windfall" holes from past quarters, and will then turn into earnings.

I'm more worried about margins on products and successful new product roll-out than inventory. Then again, major sales upticks could easily cover some margin shrinkage.

Other views?
Zap