Conference Call Highlights:
1 SBC Deal: A 3 year Master Agreement for $300M primarily of ATM equipment to the largest or at least the 2nd largest RBOC in the USA.
Wow! An RBOC validating ATM.
Significance of the Master Agreement: Telcos traditionally are more bureaucratic than any other organization known to mankind. Getting contracts signed is a rigorous, time-consuming and costly process.
... unless there's a Master Agreement in place. Essentially the board approves the $300M or at least the next year or so of expenditures, then the level of authority, paperwork, further justification, etc is reduced to a bare minimum. Essentially, NN has locked in 3 years worth of business with SBC as a result of one sales effort.
2. LMDS / LMCS / MMDS opportunity. From the conference call, it seems that the almost $1B over the past week is barely scratching the surface of a market where NN is the first player, has a big time head start over potential competitors and is expected to contribute substantially to NN's growth.
Conference Lowlight:
1. Our dear friend, Little Bobbie MacLellan of Kearns Capital asked about decreasing margin (by almost 1%) on the Enterprise sector of NN's revenues. He didn't even offer any congratulations. Surprise, Surprise. There's no doubt as to how he'll interpret the answer provided. which was that new product development costs are included but the products were introduced too late in the quarter to contribute offsetting revenues.
Great call, definitely worth listening to firsthand.
Ian.
P.S. About 3 weeks ago, I added a trading position. That has now been added to my core NN holding. |
