Notes from WLV meeting, bashers can just skip over this post so you don't get depressed: Hi all, just got back home from the meeting and wanted to share some of my observations with those that did not get to attend. I'm a little tired so forgive me if they are somewhat random thoughts with bad spelling.
· Cars: Frank is driving a Range Rover with a "FNET" license plate, Peter Buswell has a sharp looking red Mercedes convertible, Helen has a green convertible Sebring and the real unsung hero of Franklin, Chuck the lone tech support and tour driver guy, drives an old beat-up van.
Don't worry, there's more.
· Look for a revised Franklin website in the next few days!
· FNet calling card ordering & PIN number assignment totally online coming very quickly too.
· The new breeze unit is cute. Its about 1 1/4 inch high, 8" wide, 6" deep. We got to do a demo of both voice and fax on it and it works great. Production units will likely start shipping in September, probably starting with the 1,000 USAT units.
· The first Vondavi unit was just installed with our help. They are built in 2U size (~3" high), which is half the height of our regular DVG.
· The 96 port model DVG will start shipping 4th quarter of 1999.
· The NOC is about twice the size of last year, with the Harris switch nestled in the center of the room. There are also stacks for USAT's local SuperPOP (colocation), the Bosnia operation and others there. Can you say OC48? Current capacity probably OK for a while, potential for needing a second location maybe by 4th quarter 2000.
· FNet popping up everywhere, or coming soon (based on non-conclusive Ski-type evidence) to Bosnia, Albania, Macedonia, UK, Swaziland, Russia, Mozambique, Hong Kong, Guatemala, Botsawana, El Salvador, Beijing, Gold Coast of Africa.
· Production/shipping at or about 35-40 DVG per week, all on one shift for some time now. Still the same small, busy room but they could (IMO) double or quadruple production without additional space. 40 x $10k profit (my SWAG guess) = $400k per week, $1.6Mil per mth, $ 4.8 per quarter or so hardware revs.
· Only about 5% of DVGs returned for repairs, with most of them minor issues related to the PC portion of the unit, not the software or Franklin hardware.
· Ron Weaver just returned from Europe as most of you know, he had meetings in 5 countries, including Bosnia but wouldn't talk much about them. His and other's comments indicate a continued push into the Balkan countries, maybe we'll see Kosovo next?
· Overall office and production areas not changed much from last year's meeting/tour but apparently they are planning takeovers of adjacent office and/or production space in the near future.
From the meeting:
· Peter Buswell put on an outstanding PowerPoint presentation for about an hour on the state of the company and the industry. It will be available later on CD for those that want a copy. Not a lot new to most of us but a great summary overall.
· USAT seems to have about 10,500 ports up and running, with possibilities of twice that by the end of the year! Fnet is handling about a million minutes a month of "off-net" traffic for them.
· Bosnia has 4 Franklin employees supporting the operation. They are continuing to do about a million minutes a month (~$120,000) from the multi-national servicemen in the area.
· Franklin has many small customers beyond the USAT business. One example was someone who bought 6 DVGs and installed them in the Phillipines. Now they are using Fnet to terminate the US calls for them. Buswell indicated that they are working with 4 or 5 customers that have the potential to be as big or bigger than USAT (put a big forward-looking maybe here)!
· Now that we are E1 compatible, in the past month, all DVG shipments have gone to…..Europe and other international destinations (Mexico, etc.)!!!
· I asked about Cybervoz, since I have been worried it might be someone working out of their garage. Apparently they are a multi-level marketing venture with ~18+ employees and expectations to be huge. Well see about that but the idea was that this is typical of the type of partner we are happy to find. They want us to handle everything to do with the telephony side of the business.
· New direction for FNet business strategy: Focusing on the joint venture theme. Franklin sells the hardware. Customer has option to use the AMAS billing system and Fnet termination capability. Big emphasis on GLOBAL for the high margins. Investigating other eCommerce ideas but handling off-net traffic is the breadwinner right now for FNet.
· First Vondavi order was for 30 boxes, already shipped, I think.
On FNet IPO, before, during and after meeting:
· Most of this had already been leaked out prior but here's what I heard.
· No underwriter (that they talked to) willing to support IPO until $10 million a year (or close) run rate for Fnet achieved. Expected to be 10-12 months away.
· Franklin needs to get back to 80% ownership of FNet prior to spin-off. They could issue more FNet shares back to Franklin to pay off 3 million in debt to the parent company or other ideas like the Frank selling back part of his 4 million shares.
· Franklin stockholders will likely get ALL of the parent company's FNet stock. Instead of the 1 for 4 you may have heard, it could be as much as 1 Fnet given for 1 FCM share held!!!!! Probably a rule 144 one year restriction on selling that stock though.
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