The Kaufman Brothers investment bank is highly satisfied with the new design win
(Nasdaq:TIGA) has accomplished with the communication giant
The win is likely to prove a source of revenues for Tioga, as it implies that Cisco will be incorporating Tioga products into future versions of its products.
Analyst Alvin Kressler upgraded Tioga, a spinoff from
(Nasdaq:ORCT), from Hold to Accumulate. He says Cisco will probably be using Tioga's chips as switches to divide content as it gets routed into various channels. "Tioga will help Cisco cut costs," explained the investment bank.
On the way to $260 million
The analyst further explained that Cisco's technology enables high capacity switching, which enables telcos to provide added services over their existing networks. For example, they could provide VPN, virtual private networks. The bank pointed out that Cisco products target ISPs, a market bound to prosper in the near future.
Despite the optimistic wind now blowing in Tioga in view of the Cisco deal, Kaufman Brothers is not changing its forecast of the company's revenues. Anticipated Q4 2000 revenues remain at $6.3 million, and growth at 9.5%.
But the bank lowered its losses expectations. For 2000 Kaufman Bros. estimates a loss of $1.05 per share, instead of an earlier forecast of $1.14 per share. The bank predicts a loss of $1.6 per share in 2001, 1 cent less than predicted earlier.
Target price for the share remains $10, far higher than the share's opening price today, a mere $2.7. In light of this target price, the bank expects Tioga's market cap in the coming year to reach $260 million. The company's value on its first day on Nasdaq, after its split from Orckit Communications, was over $410 million.