Borrowed from RB (thanks to bwelb) CC-Summary:
WaveRider Communications Conference Call Summary ? 3/31/00
Time: 1:00pm EST ? 2:25pm EST
WaveRider Attendees:
Bruce Sinclair ? CEO
Hugo Idler ? Director Investor Relations
Scott Worthington ? CFO
Charles Brown ? VP Marketing
I had to call back once because of the ?overwhelming demand? for the conference call ? the line locked up at first. This is the
most positive conference call I have ever heard, in terms of morale, future growth opportunities, and business progression.
I will try to organize these thoughts as best I can, but this note will be very long, due to the time and nature of some of the
questions. There were several very meaningful subtleties in the call, including analysts from firms I had not heard from yet. I
apologize in advance for any typos, information I did not write down correctly, or any names I spell wrong.
A VP of Strategic Alliances will be named soon. Alliances with some of the bigger players in the market are being pursued and will
be pursued more with the appointment of this new person.
Bruce and other WaveRider employees met with investors during the IWCE convention in Las Vegas last week. The booth was
packed the entire time. Standing room only for the most part. Pulled significant number of positive deals ? shook hands on two
deals, the terms of which will be worked out later. The wireless internet area is exploding now, even more so than in just the past
three months. All major broadband companies, telecom companies, and ISPs are expressing high levels of interest in wireless
technology, which bodes well for WaveRider. Numerous analysts are very interested in WaveRider.
WaveRider?s market cap is up 8X since the last conference call.
WaveRider has 90 staff now, up from 70 at last conference call. China office now open. They have a new systems support
engineer there. They are adding technical support staff everywhere.
WaveRider is signing about one new contract per week now. ZipLink sells to 350 ISPs ? WaveRider is shipping product to them
tomorrow. WaveRider is expecting Mexico related contracts over the next couple of months.
1st Question (Me!):
Q: In the latest SEC filing, most of the outstanding options don't appear to expire for a few more years, except for one group that
expires in 6 months. Were these some of the options that were sold recently?
A: Working with lawyers to try and restructure their options so they won?t expire so soon. They do NOT want to be forced into
exercising options so soon and are concerned about the options coming due soon.
Q: Are you planning to extend the ZipLink Canada agreement down the road to their other markets across the US?
A: ZipLink Canada is a pilot test for WaveRider. As testing comes through, they plan to extend across the US.
Q: Have you been given an assigned NASDAQ person - how is the application progress going?
WaveRider is ready, but haven?t heard too much yet from NASDAQ. It could take months.
2nd Question (Roy Haus ? DataScan)
Q: Golden Fortune Update
A: Long term commitment. The potential is enormous, but business culture is different in China, and don?t expect revenues near
term. WaveRider is working with a couple different companies.
3rd Question (Louis Medina)
Q: France/Middle East Update
A: Working with companies there ? bidding ? confidential. WaveRider is getting so many requests for new opportunities its hard to
follow up on them all. They used to have applications to become a WISP on their front web page, but they got so many responses
they had to move it to another page.
4th Question (Reggie Mabry ? Our man Reg!)
Q: Pilot update
A: Sticking close to Canada now to minimize effect of bugs, etc., since technical staff close, but will expand. (I think this is what
he said.)
At this point I took some notes about how impressed I was with how management is allocating resources. They are releasing
products when they say they will, they are delivering products when they say they will. They are focusing very much on
relationships with customers. Bruce alluded to the fact that they actually got some contracts from such outstanding service. This
kind of business will serve them well down the road.
5th Question: (Dominick Pito)
Q: Financial Condition
A: $15M in cash. Cash burn rate is a tad higher than in 1999. Not in best interest of shareholders to be taken over at current
prices. They are looking into alliances though (via VP of Strategic Alliances). At some point down the road WaveRider will need
more cash to grow ? this is normal. They will evaluate which route (debt or equity) is best for the shareholders at that time. (At
current internet valuations, I think equity is the way to go if you ask me.)
6th Question (Larry Len)
Q: Institutional community, post NASDAQ, etc.
A: Bruce guesses that there will be more activity post NASDAQ, but there?s no way to know what effect this will have on the stock
price. Some institutions forbid themselves from involvement with companies financially until they move to the NASDAQ.
7th Question (Fred Mussler ? Our man Fred!)
Q: Africa update
A: Several projects active. Shipped a couple systems there. There is huge potential there, due to the absence of infrastructure.
8th Question (Tom ? US Bancorp)
Preface ? anybody know what US Bancorp is short for? They have an investment arm, I think its US Bancorp Piper Jaffray. So
this guy could potentially cover WaveRider once they join the NASDAQ, and could weld a lot of power getting his clients to invest.
I think this is a big deal that he was on the call. I didn?t hear anybody from Smith Barney this time.
Q: Number of NCL VARs
A: 40-50, mainly in the US
Q: Domestic/International sales mix
A: Currently about 50/50, but anticipate closer to 80% international with LMS products. WaveRider got a million hits on their
website last month ? that?s triple the number from this time last year.
9th Question (Steve Ambrost)
Q: Concerns in Las Vegas ? not truly wireless display
A: Rules of convention said no wireless equipment in house. Don?t worry though, because they?ve shipped tons of product
already, the technology works. Besides, a four foot wireless connection wouldn't have been a true test of a ten mile connection
anyways. They see no current bugs in their products, although there will no doubt be some to work through, and that is normal.
10th Question (Mary Stanton ? Cleveland)
Q: Market cap, shares outstanding, B2B contacts
A: 60M, 400M market cap. Majority of their customers are businesses who are building infrastructure for their clients, both
businesses and consumers. (Read ? Cisco, etc.) Mary said that there is a lot of buzz in Cleveland since the buyout of TTI.
11th Question (Joseph)
Q: NASDAQ timing
A: Next couple of months hopefully.
12th Question (Jim Trafford ? RBC Dominion Securities)
Haven?t heard of this group yet, perhaps they are Canadian or something?.
Q: Take manufacturing back from CMAC down the road, Number of units in Mexico deal
A: Totally pleased with CMAC. They have facilities in other countries, which gives WaveRider a great bit of flexibility. I missed the
answer on Mexican shipments.
13th Question (Russell Lane)
Q: Please add details about your network software to your website.
A: Good suggestion. They have password protected areas for customers and will add that for them.
14th Question (Ed Mercer)
Q: Explain stock options of Mexico deal
A: Latin America is a huge, huge opportunity for WaveRider. This company will be using WaveRider?s products everywhere, and
will essentially be an arm of WaveRider, so it made good sense. This is a good deal for shareholders, because the options are
only exerciseable if revenue reaches certain levels.
15th Question (Peter Sachs ? Sachs)
Q: LMS270 was close to launch and then yanked. Make me feel better that things are a go now.
A: Product wasn?t world class. Would have hurt the company long term. Product had technical gaps.
Q: When will revenues hit?
A: They are hitting and will continue to hit.
Q: When will stock dilution stop?
A: Addressed earlier. There are (were) two options ? sell stock, or give up. The previous equity placements did build long term
shareholder value.
16th Question (Chris Bonnet ? Groome Capital)
This is one of the analysts that wrote the last couple Groome reports.
Q: Expanding sales force?
A: WaveRider is interviewing people left and right and using headhunters to recruit top notch talent. Opening an office in Mexico
will probably be next.
Q: Anticipate price erosion when other competitors enter the market place?
A: Kind of missed this one, but I don?t think it?s an issue.
17th Question (Kelly Hoard ? Hoard Stables)
Q: Typical Pilot, typical contract?
A: $120k-$160k for pilots, $1M+ for contracts
Q: FY2000 revenue estimates?
A: Comfortable with Groome?s estimates
18th Question (Gary McCord ? T-Sig Systems)
Q: Entertaining patents?
A: Not right now, but may with future products. The most important IP they have right now is their internal experience and people.
Q: How do you see your valuation?
A: Hoping for similar valuations of competitors soon.
19th Question (Christopher Freeman ? Unterberg Tallman)
I probably spelled everything wrong here. Is this the company that participated in financing a long time ago?
Q: Looking at other manufacturing companies besides CMAC?
A: Have looked around, but none better. Totally happy with CMAC. Transfer from pilot testing to full scale production should have
no problems.
20th Question (Ken McDonald)
Q: OFDM forum ? will a global standard hurt WaveRider?
A: No. If its global, then everybody gets access. WaveRider supports this forum and will continue to do so, even though it doesn?t
hold much promise near term.
21st Question (Scott Hanson)
A: Winning contracts because of excellent customer support and help. WaveRider has made a great start.
Folks, this is the most positive conference call I have ever heard before. I can?t tell you how impressed I am with the
management. Now I am beginning to understand how important seasoned management is to a company?s success. |
