S A ADVISORY Sept - Oct 1997
New Buy Recommendation


(National Market NASDAQ - ANET)

On August 9, 1997, we informed our 900# and E-mail subscribers that ANET would be monitored for percentage gain performance in our 900# portfolio. For investors that favor micro-caps; that is, opportunities that have a market cap of under $150 million and been beaten to death by the momentum players; that this opportunity deserves a serious look-see! We introduced this opportunity at $13.25 on August 9, 1997.

The company develops, manufactures and markets Frame Relay wide-area network access products which support a broad range of voice, data and integrated network applications. The company is focused on three strategic markets: enterprise networks, satellite networks and carrier networks. The company’s products incorporate advanced voice and data compression algorithms, switching capabilities and proprietary integration technologies.

    Reasons why we are recommending ANET:
  1. Has no debt.
  2. As of June 30th, the company had $61 million in CASH.
  3. Revenues anticipated to grow by at least 50% during the next few years.
  4. Earnings have been a weak link and, of course, that is one reason why the stock trades close to its 52-week low.
  5. The company announced on August 1, 1997 that a repurchase program has been approved by the board to purchase up to $10 million in stock.
  6. Book Value around $10.07 - so only trading at 30% above it stated BK.
  7. With only 9.26 million shares outstanding and a float of only 5.3 million, ANET has the potential to rocket if things begin to gel.
  8. Recently made an acquisition that appears to be an excellent strategic fit for future growth in the emerging telephone gateway server market, predicted to grow to over $1.8 billion by the end of 2001.
  9. The high for this stock was $48 during 1996 and $38 during 1997, so we really like the price. We are buying ANET 66% below 1997 high. We love it!
  10. The company is expected to grow by 50% during the next few years, so an estimated P.E. of 25 for fiscal 98 is not that expensive (the estimates come in at .45 - .50).
  11. We think that this situation has the potential to double from here.
  12. It remind us of OCTL when we purchased it at $16.00 and two months later it was purchased by the Lucent @ $31.50. Our point, that ANET could be an inviting target due to its technology and CASH! TIME TO BUY not SELL.
  13. ANET spends quite heavily on R & D and is acquisition oriented.
  14. ANET, to reiterate, is out-of-favor, under-followed, obscure, fundamentally very strong, could be a takeover candidate, trading 66% below 97 high and best of all, makes us feel fuzzy inside and when that happens, you gotta BUY it!
Broker contact: Greg Nelson at 1-800-269-9460/801-265-2160.
Corporate: Mr. Flowers at 805-388-2474 (CFO).

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