Terayon Communication Systems (fka TERN)

[ScovilleUnits]

TERN: Merriman Cuts to Neutral from Buy; Analyst Notes

Thursday , January 11, 2007 08:01ET

Issuer: Terayon Communication Systems, Inc. (Pink Sheets: TERN)

Analyst Firm: Merriman Curhan Ford & Co.

Ratings Action: DOWNGRADE

Current Rating: Neutral (from Buy)

Analyst Comments: Terayon has filed 10Q reports through September of 2006, a week after filing its 10K for 2005, and announced a planned conference call to discuss these results as well as a "business and strategic update". The firm says this is big news and good news, as the last quarter Terayon reported was 2Q05. The "strategic" description of the upcoming call is notable, as they assume the recent strength in the shares is based on anticipation of an acquisition. It certainly was not the anticipation of strong results, and because they find the shares fairly valued relative to an acquisition scenario with fairly aggressive synergy assumptions and much more than fairly valued on a stand-alone basis given current operating performance, they are downgrading the shares to Neutral.

This rating information was reported by Merriman Curhan Ford & Co..