DIV POTENTIAL

"But another DPI leader is selling at a bargain-basement price, after warning investors last week that its March quarter sales will fall short of expectations. Nasdaq-listed Allot Communications (ALLT) fell from above 9 to around 7, for a market value of about $145 million. Allot came public in November at $12 and finished 2006 with $34 million in revenue and four cents a share in earnings. It expected sales of almost $10 million in the March quarter, but admitted last Monday that they will probably fall below $8.3 million. Allot blamed its third-party distributors for the shortfall. Yet Allot says that it's doing fine in its direct sales to telecom carriers.

Investor relations head Jay Kalish told me that the company is a contender in many of the ongoing requisition plans, with a box Allot is developing that will run at 10 Gigabits a second, like Sandvine's. The product will be available when networks are ready to buy in the third quarter.

Meanwhile, Allot had more than $80 million in cash on its December balance sheet, so the disappointed stock market is really valuing the company at about $70 million. That's around 1.5 times this year's sales for Allot, compared with 7 times sales for Sandvine."

Downgraded by RBC Capital Mkts from Outperform to Sector Perform

Allot Communications was an IPO a months back. The IPO came at a bad time in the market. I feel that once they get noticed they will do okay. They are a designer, developer, marketer, and seller of broadband service optimization solutions. Their solutions provide broadband service providers and enterprises with real-time visibility into, and control of, network traffic