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Technology Stocks : ANTEC Corp. (ANTC)
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To: MikeM54321 who wrote (481)12/8/1999 11:31:00 AM
From: DenverTechie  Read Replies (2) of 847
 
Up almost 2 already this morning. Nervous hands indeed.

To answer some questions. The gross margins decline as Cornerstone voice and data become an ever larger percentage of Antec's revenue. This was stated in their last quarterly report and statements by Jim Bauer. There is a fixed mark up of Cornerstone to AT&T at 15%. But it is very important to keep in mind that as the gross margin decreases, the actual OPERATING margin INCREASES because expenses on Cornerstone are very low. ANTEC purchases the Cornerstone equipment from Arris as Mike has stated and then adds the mark up.

As far as competition, Tellabs has the competing product in Cablespan that also has very low margins (the big margins at TLAB are on Titan)and it is not approved for use in AT&T's networks yet, but it's getting there. But there's more than enough demand at AT&T to add a second supplier while shipping Cornerstone at the max. ADC Telecommunications makes Homeworx but AT&T has analyzed and tested the ADC system and found it lacking. It is not approved for use in AT&T networks, except where grandfathered by MediaOne properties, once that deal is finalized.

Telewire contributes the highest percentage of revenue to ANTC and it's margins are fine.

As shown by the price rebound this morning, another overblown non-event. I think Mike hit the proverbial nail squarely. This is the usual bantering between supplier and customer as normally occurs at every cable company and surely is not worthy of national news.
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