Robert: During times of uncertainty it is often constructive to study
recent industry accomplishments of a particular company. This is my
best shot.
1) At CT EXPO DLGC won more best of show awards than any other vendor.
2) Partnership with Compaq addressing latest Windows NT CTI solutions.
3) DLGC has the latest full range of internet CTI solutions including
but not limited to the following:Real Time Fax;Voice over IP;Call
Center Access;and unified messaging.
4) In the domain of raw high performance CT systems Dialogic is rolling
out the new DM3 media stream processor with 3 industry applications.
4a) They have a 48 port fax broadcast system built on 2 DM3 platforms.
delivering 3 times the competitive performance densities.
4b) They built a 1000 port CT system in a single chasis that is 4
times the competitive best.
4c) The internet telephony gateway running H323.
5) DM3 is enthusiastically being received in the industry as the new
performance champion, besting the previous industry leader by 2
times in density; and several fold in raw MIPS and flexibility.
6) DLGC will be rolling out a 10,000 port ATM hub system with switching
and media processing on every port. This is being delivered with Fore
Systems and IML DLGC's new ATM technology partner. This is the first
time anything of this scale has been built. The ATM product used for
this system is currently available from IML through DLGC and is in
trials at multible sites.
7) The Spectron division achieved a major milestone in that Texas
Instraments will be supplying Spectrons SPOX Bios for use on TI fixed
point DSP's. The BIOS product has been endorsed by numerous TI developers
and is now the Defacto Standard DSP Kernal for the worlds largest DSP
company.
Robert, I am happy that you are back on the board and Welcome your
participation. Because I'm NOT an engineer I value your balance of perspective.
I Don't have the time to respond to all of your points now because I'm
in the middle of EPS season and "bearly" keeping my head above water
with the recent Technology selloff. However, I do take exception to many of
your conclusions. Rather than going through them all it will be more
productive for the board for me to respond generally.
Remember that the nature of this company's business is that expenses
proceed revenue and that they need to invest for 1998 and beyond to
exploit the "many" internet opportunities. They have missed by 5% in
revenue before, yet their industry position is (IMO) intact.
Robert you must conceed that the internet will be the next mass medium.
The business opportunity for the Data Networkers is estimated to be 100
billion in revenues by the year 2000, which is up from 36 billion in 96.
This represents a 177% growth rate over the next 4 years. The voice market
is not growing as rapidly because standards are only now being developed, and
the proprietary high margin PBX vendors have been slow to adopt open systems.
Hence, people apply the word standards liberally and confuse the MIS execs.
Also, corporations are evaluating their networks as strategic competitive
weapons. They must structure their network to accomodate not only their
internal needs, but also the needs of suppliers and their target markets.
Hence, networks are becomming more heterogenious to accomodate vertical
business applications. This additional compexity is extending the sales
cycle. This is not an excuse for DLGC,rather, a general industry observation.
Finally, many infrastructure vendors (DLGC) are spending now to exploit
the opportunities of tomorrow. Hence, the MIS confusion cited above in the
context of the vendors spending now is pressuring margins. I do believe the
voice over IP and DLGC's position are viable. I would not for one moment
consider an investment in any other voice stock over Dialogic. NMSS and
Brooktrout are not 1/2 of DLGC even though they have better shareholder
returns. I will not distract the board with them because they are NOT taking
market share from DLGC. DLGC is taking market share from the proprietary vendors
and growing annual revenue faster than the CTI market at large from a much larger
base than NMSS & BRKT cited above.
Conclusion, I clearly have a lot of homework to do with this company and I will
share all of my due diligence with the board in the hope that the board will
will share their work with me making all of us better long term investors.
P.S. I will be breaking bread with mngmt on Tuesday and will share my findings.
As always, I'm long DLGC and Happy Investing |
