Mark --
How do we find out what modems TERN has submitted to CableLabs? If they've only submitted their OEM products, how will their proprietary modems "migrate gracefully" to an S-CDMA DOCSIS version? I believe this has been their sales approach all along --- "buy proprietary and migrate when we receive certification." Would there be any case where a carrier would migrate from a TERN S-CDMA to the OEM product? I'm not an engineer, but I'm guessing this isn't possible.
Looking more closely at TERN's recent S-3 it appears they're downplaying their S-CDMA emphasis.
First, the "overview" from the latest 10-Q dated November 15, 1999:
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS
Overview
Our core line of business is to develop, market and sell
broadband accesssystems based upon our S-CDMA technology. Our objective is to be theleading provider of broadband access systems to cable operators seeking to provide broadband access services to residential and commercial end users.Since our inception in January 1993, we have focused on the development ofour S-CDMA technology, as well as certain other core technologies, to enable broadband
transmission of data over cable networks. We began the specification and design of our first ASIC in October 1994 and produced thefirst version of this ASIC in September 1996. At the same time, we developedan end-to-end broadband access system, the TeraComm system, around the ASIC.During late 1996 and through 1997, we began limited field trials of theTeraComm system with several cable operators. We commenced volume shipmentsto a small number of cable operators in the first quarter of 1998. We hadrevenues of $23.4 million for three months ended September 30, 1999 and$58.3 million for the nine months ended September
30, 1999. This comparesto revenues of $9.4 million for the three months ended September 30, 1998and $18.8 million for the nine months ended September 30, 1998.
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And then their "overview" as stated in the recent S-3, dated January 25, 2000:
Overview
Our core line of business is to develop, market and sell broadband access systems that enable cable operators to cost-effectively deploy reliable two-way broadband access services. Our TeraComm system is designed to enable
cableoperators to maximize the capacity and reliability of broadband access services over any cable plant. This allows cable operators to minimize time-consuming and costly network infrastructure upgrades, achieve reduced time
to market andprovide a wide range of service levels to residential and commercial end users.Cable operators using the TeraComm system can provide additional revenue-generating services to end users. This enables cable
operators to competeeffectively in the emerging market for broadband access services.
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I'm still trying to figure out what will happen if Rogers returns the products referred to in the S-3. Will TERN have to restate their earnings? Since they haven't been able to recognize them, will they have to re-state anyway?
I'm also trying to find out what responsibility TERN has in terms of alerting shareholders to material changes to business. It seems to me burying the Rogers information inside the Telegate-related S-3 isn't quite what the SEC had in mind. Perhaps we could do a survey to find out how many shareholders read SEC filings. :)
Thanks for the excellent discussion on CDMA and George Gilder's attitude towards S-CDMA.
Pat |
