Com21 Conference Call, January 13, 2000
Introduction by Pete Fenner, CEO, from Monterey, CA, where company is holding a sales and marketing conference.
Best quarter ever, received DOCSIS on four products, introduced CMTS at cable show in Dec., and successfully launched high-end modems.
280,000 units shipped in 1999, 3.6X a year ago
Rev $97.7m, 2X y/y
101,000 units shipped in 4Q, 3X a year ago
Revs $29.7 m, up 59% y/y
Fourth Q bookings up 235% y/y
10% customers include ATT, Philips, and Siemens
17,000 DOCSIS shipped, up 60% seq, and 190% y/y.
370,000 total modems shipped
860 total head-ends, up 74 in Q4
14 million homes passed, up 1.4 million for Q and 4.8 million for year.
Will double sales force this year. Increasing marketing globally.
Flash memory deducted 5.3% from margins. Producers have raised prices and pressure will continue through first half. Lower cost DOCSIS modems will be launched in 2H and should improve margins.
ASPs tracking to plan.
Book to Bill was strong. Well over one.
$105 million in cash and securities.
22 Turns
DSOs 55
Overall market expected 1.5 million modems in '99 and latest estimate for year is 2.2. Estimate for 2000 is 4 million.
Affect of AOL-Time Warner merger: Yankee Group estimates it will make AOL much more cable-centric. Very good for CMTO.
Asian recovery, especially in Japan, has positive impact. Working with 23 cable companies, and have $5.5 million booked this quarter.
We are strong player in cable sector and will be strong in video.
Q&A
Q: Split in DOCSIS vs. proprietary? Re-certification needed?
A: All modems are 1.1 "friendly" No re-certification needed on those already passed.
Q: DOCSIS head-ends?
A: It's 1.1 targetted. Testing in June-July time frame. Will submit to 1.0 before then. Not with customers yet. Same time as to labs.
Q: Any jump in software sales?
A: SW bundled into management system and tied to head-end sales.
Q: timing and size of MMDS, and DVB?
A: MMDS trial in Bay Area now, negotiating prospective customers in S.A. now. DVB -- purchase orders now. Telephony with TVSoft on track. Working with first lead customer.
Q: Revenues?
A: Ramp in 2Q. We've been learning in Europe. A lot of vagaries to shake out in MMDS. Significant revs eventually.
Q: Head-ends to North America?
A: Yes.
Q: Lower cost modems?
A: This is a step function in cost reduction. We had interim product that was excellent. BRCM 3350 will add changes to amt of flash needed. As market continues to explode some vendors are leaving and eventually market will stabilize.
Q: Will you expand to video?
A: Video is important. Voice is focus now. We definitely feel video is important and are designing head-ends to offer this. Gateway to home will carry video and multiple tuners. Will be outside box. It will be 2-step function. First MPEG and then IP.
Q: Has anyone else a 1.1 "friendly" DOCSIS product?
A: Yes. GI and Thomson.
Q: Update on 1.2?
A: It will not have physical layer stuff. Some changes to physical layer and none will include CDMA.
Q: NIU shipments?
A: Not scheduled for shipment. Is in intensive design stage. Aiming for next year.
Q: Competition and 3300?
A: Gives ability to do fragmentation and different qualities of services, including voice. Don?t' know what competition has done with it.
Q: Mix of DOCSIS vs. Proprietary?
A: Industry as a whole --- proprietary will be flat; CMTO will continue to grow, particularly in Europe and Asia. By end of year we'll see growth in both. Beauty of DOCSIS is that it opens markets we didn't have before. VideoTron is good example. Speed and power monitoring allows wins. Build-up is not people issue --- we'll be doubling our sales force. Now regional structure. Lots of applications. Will be adding throughout year.
Q: Retail?
A: Latter part of year.. Industry is growing so fast, we can't put number on it. Yankee Group says store retail won't be big soon. Retail on-line will grow rapidly.
Q: Quantity of non-BRCM DOCSIS?
A: Still in works. Depends on performance versus 1.1
Q: Cost?
A: Strategy is to have good, better, best, and super-best or Professional. We're doing that. Office modems are "best."
Q: On video and NIU you'll give full set-top box functions? Will this eliminate need for set-top boxes completely?
A: Yes. Also wireless and HPNA and co-axial access.
Q: Mux-node?
A: That is where market is going. Will be disruptive to what people are now doing.
Q: When?
A: End of this year. We'll have product out next year.
Q: DOCSIS office modems? CableLabs timing?
A: Positive feed-back. They want products like that. We've made chip change and are submitting this round.
Q: Is it 1.1?
A: Yes. Absolutely.
Q: USB vs. 1394? PCI cards?
A: We will include USB connection on low-cost platform in 3Q this year. Cable labs will test.
Q: PCI cards?
A: No. Not a big market. Home network market developing. Not modems in every device. Advantage to having NIU on outside of house. Less noise, etc.
Q: Estimated revenues and any obstacles you see?
A: Industry going from 2.1 to 2.4 cables in 99 to 4 to 5 million in 2000. We will participate in that growth. $95.7 last year --- we'll do better than that.
Pete: We're expecting significant growth just as we have before. No obstacles but lots of opportunities. We got 4 modems certified. 2 with new ASICs, all from great engineering team. Good sales team, too.
Q: Sales force, US versus non US?
A: We have good coverage in US. Will add about 30%. We'll double in Europe, and add significantly to Asia and Latin America. Asia extremely strong, especially Japan. China is developing. Head of region is Chinese National, based in Hong Kong. Fine relationship with systems integrators. Combined resources will make us successful. Will add 60 to 70% to non-US sales.
Q: Geographic mix?
A: 30-35% North America, 25% Europe, 20 to 25% Asia-pacific, and the rest Latin America.
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Pete is at sales conference in Montery for the rest of the week. Any questions can be handled by Judy Yokem at 408-953-9218. |
