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DJN: =DJ DSL.Net Up -2: Analyst Has $20 Price Target >DSLN
(Dow Jones 08/23 14:24:05)

By Peter Loftus

NEW YORK (Dow Jones)--DSL.net Inc. (DSLN) shares rose sharply for the second
consecutive day, following the company's announcement of a partnership with
International Business Machines Corp. (IBM).
The New Haven, Conn., provider of high-speed Internet access said Tuesday
that IBM would begin offering DSL.net's services to its small-business
customers. DSL.net specializes in digital-subscriber line, or DSL, Internet
access, which uses souped-up telephone lines to deliver high-speed,
high-capacity connections.
The DSL service will be offered through IBM's Small Business WebConnections
service, which also offers hardware and software to business customers for a
monthly subscription. The package including DSL.net's service will cost at
least $219 a month.
"What this deal does is it illustrates DSL.net's ability to go out and
garner large sales contracts," said Sanders Morris Harris analyst Dan Ross.
"IBM is clearly a 'who's who' in technology."
Ross, however, hasn't yet adjusted his revenue and earnings projections for
DSL.net in light of the IBM deal. He said it's not yet clear how many new
customers DSL.net will sign up as a result of the pact. The company had
6,100 customers at June 30, up sharply from 958 at Dec. 31.
Before Tuesday, DSL.net shares had dropped substantially, reaching $2.41 on
Aug. 14, the lowest point since the company's October 1999 initial public
offering and far off the high of $32.56 set Feb. 17. Last week, a spokesman
attributed that drop to the broader Internet-access sector falling out of
favor with investors and to DSL.net's soft second-quarter revenue.
But after the IBM deal was announced Tuesday, the shares closed up 99%. In
recent trading Wednesday, they were up $2.22, or 36%, at $8.44.
Ross has a 12- to 18-month price target of $20 and rates the stock at strong
buy. But for the short-term, he said, he would caution investors about
buying DSL.net if it goes above $10. They may want to wait until a clearer
picture emerges of how much the IBM deal will boost the company's subscriber
base, he added.
DSL.net officials weren't immediately available for comment.
- Peter Loftus, Dow Jones Newswires; 201-938-5267; [email protected]

(END) DOW JONES NEWS 08-23-00
02:24 PM
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