NEW YORK-DSC Communications Corp. has seen its stock trade recently at less than half of its 52-week share price high of $64. Although the short-term prognosis for the company is troubled, the second half of the year should see marked improvement, securities analysts told RCR.
The company was trading at $XX on Thursday. Based in Plano, Texas, DSC is a major manufacturer of switches for wireless and wireline telecommunications. In fact, nearly one quarter of its revenues come from the sale of cellular switches, and Motorola Inc. is its biggest customer, according to Brian Modoff, telecommunications equipment analyst for Rauscher Pierce Refsnes Inc. of Dallas.
Motorola reported unanticipated and disappointing fourth-quarter 1995 results. “When Motorola sneezes, DSC catches cold,” Modoff said.
Cellular switches and optical transmitters are two key areas of high gross margin business for DSC, he added. In 1994, DSC acquired NKT Elektronik, a Danish company that manufactures optical transmitters and other equipment for the European Community marketplace. “It was a good acquisition, but it has taken DSC some effort to assimilate NKT,” Modoff said.
DSC is advising investors that the first two quarters of 1996 will not be up to par compared with the same period in 1995, but that the second half of the year will be better. “I would tend to agree they will probably see fresh orders, especially with the new telecom reform act and (as) cellular will start to rebound,” Modoff said.
Securities analysts at ComVest Partners Inc., Dallas, and at Dean Witter Reynolds Inc., New York, confirmed Modoff’s assessment, but would not speak for attribution.
Company officials could not be reached for comment, or were not authorized to speak to the press.