PaperChase- Fortunately this thread is short of posts and it's easy to go back and read six months worth. You seem to have a good grasp on ANTEC and it's challenges. There isn't much to dispute with what you have posted. Just a few thoughts.
I do think you should have taken your ANTEC sales figures back to Q1 1999 for a more fair evaluation of growth. I would estimate the MSO spending started in earnest about 98Q4. Somewhere around there. I think if you took your figures back to that point, it would be a more fair picture of when the MSO ramp-up started.
I do believe the service provider business is seasonal. Especially when outside contracting is part of the contract as is HFC upgrades. And MSO have budget deadlines as do most large organizations. So I think yr/yr comparisons do mean something and should be considered.
Gross margin?...well you don't get much counterpoint from me. If ANTEC is not a re-seller of products, than ANTEC needs to charge like they are not. Either charge more for their products, or become more efficient at building/supplying them.
As I believe you are aware, ANTEC is in a unique position with their cable telephony product in the fact it can migrate to VoIP without forklift upgrades to the SPs. Seems like this should be worth a premium to MSOs, doesn't it?
The margin problem was talked about in great detail during the CC and PRs in 99Q4. I'm not quite sure why you thought anything would change in the near future. Maybe I missed something? I think as long as they don't get high margin install business(HDTs), then margins will remain low. But eventually, T is going to need to go back to HDT business. But this is the risk one takes with ANTEC.
I believe Harmonic, in yesterdays CC, has substantially reduced their dependency on T. ANTEC needs to do the same. But it must be difficult to turn away business from T, when labor is so hard to get. In other words, if they pick up business from other MSO's, where is the labor going to come from to service the account or deliver the products? Although you consider the growth anemic, I bet the personnel department at ANTEC would not agree. I think Armstrong needs to reward ANTEC loyalty by letting them charge higher prices. But that statement is probably only worth a chuckle.
All in all, I think the real issue one should focus on is the bigger picture. And that is crucial to ANTEC being successful in the long run. And that is Mike Armstrong's vision of where he is taking AT&T. That's the real risk.
While attempting to find a mention of a specific downgrade or revenue adjustment by analysts in 2000, I came across some comments printed in the WSJ Online edition that are fitting.
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WSJ April 13, 2000--Analysts expect equipment supplier and developer Antec Corp. to post first-quarter earnings of $.19/share on revenue of roughly $240 million, compared with 13 cents a share on revenue of $145 million a year ago.
"Antec has had its share of financial problems, but its position in cable telephony is starting to bear fruit," said Warburg Dillon Read LLC analyst Anton Wahlman. "Subscribers are starting to sign on."
The ambitious plan unveiled earlier this year by AT&T Chief Executive Michael Armstrong to boost the number of the company's cable telephony customers from 20,000 to between 400,000 and 500,000 by year's end is good news for Antec, which holds about a 90% chunk of AT&T's business.
"If he is going to meet that goal, it's going to make Antec shareholders very rich," said Wahlman.
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IMHO, a major consideration one should have regarding ANTEC-- AT&T and other MSOs future vision. Are MSO's really going to follow through on by-passing the 100 year old twisted copper pair and hook up 70,000,000 homes with HFC two-way systems, including local cable telephony? It's a longer term paradigm shift that I don't have the answer to. Short term though, it's looking positive. -MikeM(From Florida) |
