Netergy FY2001 Q1 Conference Call - 26 July 2000
Paul Voois (PV) and Dave Stoll from Netergy were on the
call. Paul started with a business overview, Dave did
financials and it ended with a Q&A from "analysts".
The main points from the prepared part of the call:
- Netergy now has around 250 employees with addition
of Uforce, about 140 people in R&D. Netergy now has
a presence in Europe (England and France) along with
east/west coast of USA (Canada and Silicon Valley).
- IP Telphony revenues were about $500K, a 90%+ increase
from last quarter; this is licensing, Audacity and Symphony
test-trials units etc.
- IPBX, fully-featured, won't be available until Q1, Calendar
year 2001. The main reasons for the delay are:
1) Incorporation of all Uforce features into the IPBX
2) Scalability/reliability testing that needs to occur.
- Dialink live trial continues, Netergy won't be doing
any more live trials currently by their own choice because
they are getting good testing/feedback with Dialink and
they want to have all the engineering resources available
to complete the Uforce/IPBX integration.
- Audacity T2 out in limited production quantities ramping
to larger production runs over Q2 and Q3. Netergy has a
backlog of orders that sounds fairly significant - they
wouldn't be specific other than to say the order size
will quantify the signifance of Netergy's Audacity T2.
- Cash burn rate will accelerate as ramp-up to production
for IPBX continues. Netergy expects to run cash no lower
than $15M and doesn't anticipate having to go out for more
$$ though they always have to leave that option open.
- Alcatel relationship continues to go well: Alcatel has
> 50% of ADSL market and has licensed to use Netergy chips/
software
- ST Micro relationship also going well: ST has licensed
to use Netergy technology in set-top VoIP applications
- AG Communications continuing trials/test of Symphony,
unfortunately larger companies are slower moving in
their implementation/test (also mentioned during Q&A).
[From Q&A, paraphrasing answers...]
- IPBX main gating items to production release are:
1) Integration of Uforce features (messaging/voicemail etc.)
2) Scalability/reliability testing of up to 10,000 users per
system
3) Getting support organization in place (staff) to support
carrier live trials
- There are national/international carriers currently in
lab test and Netergy expects more announcements before/by
Q4. The process has been slow because these companies
are slow moving with their testing/qualification.
- Customer feedback has been that Netergy's IPBX is
currently the best product out there, main competition
is small privately-held companies that don't have the
features or vertical intergration that Netergy has
currently.
[My Comments]
Not much new, news. Disappointing that the Uforce
integration will take a little longer, but kind of
expected it. One schedule slip is expected/acceptable,
however if it occurs again, this is an indicator of
bad management.
Since the larger carriers are slow to complete testing
and integration anyway, I suspect they Uforce integration
slipping won't hurt much in the overall picture -- that is,
as long as the final release is complete and solid.
As an aside: I hope the Canadian (Uforce) work-ethic is
equal to the American (Silicon Valley) work-ethic.
Shareholders: note that Cisco and other companies are
buying VoIP companies with valuations on the high-end
approaching $5M to $7M per employee for a development
stage company. Netergy is production stage with Audacity
and soon to be production with IPBX - if you plug in
250 Netergy employees, 23 million shares and $5M to $7M
per head, you get a stock price for a buyout of between
$54 and $76 per share.
I still think a buyout will be much too cheap for the
long term potential this company/stock has, but you can
see that the current price is signficantly undervalued.
If you have a long term perspective, don't give in to
short term fluctuations. |
