A lot of new analysts at this conference call - or they just spoke up. The analysts are probably drawn by the lower valuation. And there was a lot of "kicking of tires" at the conference. Questions were more related to management objectives rather than which GPS markets are picking up.
Just some comments at the numbers:
Land survey was flat - Obviously Japan did not help. Topcon deal did not make a significant difference. And when is the effect of Japan's approval of RTK going to help sales? Also, postponed sales due to Trimble 4700 introduction. The Land survey sales have been stagnant for a while. The run rate should be increased to $25 M per quarter. How can that be accomplished?
Big improvement in Europe - Who is in charge there? Get more managers of that kind. Europe is of course Leica's home turf. So, a remarkable performance even prior to the introduction of Trimble 4700. What are the chances that this spectacular performance will hold next quarter? Or was it due to a lumpy order that came through in the second quarter?
Down in Asia: Understandable downfall in Asia. Some loss in car navigation market. Too difficult to judge whether Trimble's plan of action is working in that market or not.
AVL, Mobile Communication: What is happening there? Why should it be down? Why this over-reliance on AMSC? This market should be picking up. And it is a huge market with a lot of room to grow. Trimble has announced so many new products in this market. Are these not addressing the market? Who is in charge here? This should be a growth business, it is a productivity improvement tool, part of transportation logistics. And there is increased attention being paid to supply-chain planning in large corporations.
Software and components: Hit by Geotek. Less competitive in the Japanese car navigation market. I think it is a fundamental problem, not just a dollar/yen problem. I don't think car navigation is coming fast enough. Europe and US are not significant enough markets. Also, no more new players to sign up deals with. Software and components is going to be dependent on sales in the timing/synchronization market. Timing sales in the last quarter were probably very small in spite of a 47 percent growth rate. I expect timing sales to increase to about $5-8 M a quarter. Hopefully software components sales would then move to $12-14 M a quarter.
Aerospace: The growth has stopped. The growth that came with Honeywell alliance and CUGR seems to have have reached its peak. Trimble has been trying to pose as an avionics company. Is that really succeeding? How are Terra products selling? What is up with the Trimline avionics suit. Trimble has reached Avionics revenues of second tier avionics companies, say like Canadian Marconi, Interstate Elctronics, Universal Avionics etc. It is definitely creditable. Now, can they run with the big guys - Allied Signal, Honeywell, Rockwell, Smith, etc. That is a tough challenge. Should Trimble even try to pursue that market - non-GPS avionics market?
Marine: Marine should be up for the next two-three quarters due to GMDSS.
GIS: GIS growth seems to be slowing down.
Agriculture: Agri is obviously coming off a low base. But Trimble has definitely impressed in that market. I have seen it coming and have indicated so in my older posts. This is a huge market in terms of numbers. Will be a fundamental tool in a farmer's arsenal. Promising.
Military: What is happening with the Lockheed alliance on "smart bombs"? Is that the military project that is going to be more profitable in the next phase?
Arun |
