Re: Tellabs (sym:TLAB) 99Q3 CC Notes
Thread,
This was a very long CC. So once again, I may not have all the facts straight. So don't hold me to any figures/comments I post. The CC jumped around quite a bit so my recap may seem a little jumbled. I'm not going to do any fact checking because these notes took enough time already.
For those that don?t know, TLAB is pretty well positioned to take advantage of all last mile technologies indirectly by having positioned themselves right on the other side of the last mile. So as bandwidth technologies are deployed (irregardless of what technology is used), TLAB benefits. IMHO, they are better positioned for a DSL explosion. But I'm not as familiar with their HFC or Wireless products as I would like to be, so I could be wrong.
Although it has been neglected by the financial press, IMVHO, TLAB will be one of the better positioned equipment vendors to take advantage of the $2 billion/year spending plans of SBC's Pronto project. I sometimes get the sense that TLAB gets there vision by talking with SBC (who happens to be there only 10% customer). The Pronto announcement and Tellabs CC seemed to correlate quite a bit. In other words, it appears TLAB is developing their next generation products to fit right into the future needs of SBC. But this is all just my speculation.
I was surprised to hear TLAB have problems in one of their hot new product areas, "Cablespan." Apparently this is putting a slight drag on their margins. And they were very optimistic about it's future. So they see their margins as being a problem they have to get under control. As a matter of fact, when giving guidance to an analyst on overall margins, it was specifically stated Cablespan may pull it down a slight bit.
And it was clear that 1999 was not the year of new products as previously stated it would be. But in spite of that, the cockroach of telecom equipment, Titan Digital Cross Connect came through for them and made the new products not as relevant as initially thought they were going to be. So this sets TLAB to do very well in 2000 with new products. And IMHO, kind of good timing with all the recent announcements by RBOC/ILECs to finally start spending some big money.
MikeM(From Florida)
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Revenues (They are always so open about this?)
--$594 mil this quarter overall. It was up 39% yr/yr.
--Of the $594 mil, $334 mil was Titan related.
--Of the $334 mil, Titan 5500 was $300 mil!
--Of the $594 mil, $104 mil was from Martis DSX. Up 5% yr/yr.
--Of the $594 mil, $64 mil was Echo Canceller. Up 26% yr/yr.
--Of the $594 mil, $20 mil was from Tellabs Denmark (essentially Martis related)
--Of the $594 mil, $27 mil was from Cablespan. Up 59% from my previous Q2 CC notes.
--Of the $594 mil, $34 mil was from Customer Service revenues.
SBC Pronto/Optical Speculation
--Only have one 10% customer. It?s SBC(!).
--TLAB said they are directly in the space that SBC needs to do work on, fortifying backbone.
--TLAB hopes to deploy Titan 6500 in it.
--Titan 6500 will be physically installed in 00Q1 test.
--DWDM is very important and TLAB wants to have the most reliable product on the market before rollout.
--In trials with Everest (IP router on an ATM platform) with large customer. Coincidence? SBC said they want to upgrade their metro backbone to ATM packet voice.
Titan 5500 Cross Connect Notes
--Titan 5500 installed base is 2,500 units.
--Q3 had 30% new 5500 systems and 70% was upgrades.
--Top customers are SBC, Pac Bell, Bell Atlantic, AT&T Local, US West. Nice customer list!
--RBOC/ILEC revenues were up 50% yr/yr.
--IXCs up 20%
--CAP/Cable/CLECs up 20% yr/yr [Cableco and Titan? I don't get it].
--Misc up 10% yr/yr.
--A few 5500s are sneaking in the backbone via AT&T, but not significant.
Martis Notes
--Have six new customers. Four in Latin America. Two in Asia.
--Giving up on Ericcson. TLAb going after their contacts directly.
AN2100 Gateway Notes
--Sprint was supposed to deploy in mass, but Sprint had other vendor problems which delays AN2100 deployment.
--AN2100 is backoffice of Sprint's ION. Should get some Pronto revenues here too.
Cablespan Notes
--Cablespan has five large customers. UPC/Europe and MediaOne are two largest. Plus RCN.
--Have 5 more in early trials.
--AT&T is in, "extensive," trials. Almost early deployment. But no formal contract yet.
--Expect double digit growth from Q3-Q4.
--Important to get margins under control. |
