Report from Dennis Duke at Montgomery conf. in San Fran:
Dennis confirms the Q&A as previously reported by Larry J. (He says it sounded like a
tape recording of where he was just at). Given that play by report, from side-bar
conversations from people within the company, Dennis adds the following:
1. Do not feel the LU deal will happen. Rather, the company is just building
infrastructure to grow the business. The previous infrastructure did not allow enough
forward visibility for good forecasting of future years of multiple quarters. Anyway, the
company is being conservative until they have the information to work with. The
infrastructure support target is such that it can support a company with between $3B and
$5B in sales. This suggests that the internal infrastructure goal contemplates ASND as a
separate company (otherwise, why spend money on infrastructure if just going to
consolidate 6 months from now).
2. The Oracle MIS system was reported to be being finished in Q4, which should provide
greater visibility. (Currrent visibility is limited to within 1 year, not the multi-year core
plan that is required.) This restriction on visibility is the fundamental reason why the
company is being so conservative about releasing information on major new clients. (I.e.,
want to keep control of the stock price...understand where we are going...this is where
we are going next, etc.)
3. Mgmt.remains positive on 2H98 and is "very" positive about prospects for 1999
(particularly with respect to voice over IP). Can't change 1999 estimates yet due to
visibility issue, so, can't guide analysts up yet (they are pretty flat on 1999 vs. 1998). The
overriding word is that the company will be conservative until they get more time to get a
handle on this visibility issue.
4. As for the AT&T contract, the order is not yet in hand, though equipment is being
tested and being favorably received. It appears that the order pattern will be: Here is a
purchase order for what we want during the current period (rather than a 5-year order,
although it might yet be forthcoming). It is the AT&T analysts who are reporting 200
points of ATM from ASND. Indeed, ASND read that news item with the same interest
we did (so we believe it is not in their numbers).
5. Other (non-ASND) sources at the conference advised Dennis that the new NN
switch is supposedly 4 times the physical size of ASND's switch, unknown throughput
capacity, and is being delayed until the Fall of 1998. Someone else commented that such
a huge size is not uncommon given Siemens' involvement.
6. A comment by ASND was made that Japan can't go any lower than now. So, can
only be growth somewhere down the line. Also, previously, CSCC product was only
being sold by North American reps. That is in the process of changing, so the worldwide
opportunity for sales is enormous.
6. By 2H98, the GBX550 will support direct hookup to two-way fiber without a
concentrator in between.
7. Dennis' bottom line assessment: He is holding because of the future substantial growth
opportunity of the company. He would expect to see the stock price begin to start its
move in Q2. Q1 will be played as predicted, but Q2 may (in Dennis view) potentially
exceed the predicted high single digit number.
Thank you Dennis Duke!!! |
