I agree, kudos to Jeff Stone! A guy who doesn't take no for an answer, he found a way to phase his questions so the CEO could give the information he needed.
Okay, my take on Vari-L's first quarter conference call, April 24, 2000:
Sherman:
Emergence of MMDS and LMDS
Strong demand from our traditional markets
Best quarter in company's history
Clarke:
[Restated numbers from press release]
Orders were up 102%, greatest gain in company's history, 132% growth. Domestic up 117%, international up 76%. 200,000 increase in backlog. Orders grew faster than backlog. Strong margins.
There is a close parallel between customer orders and actual revenues. Have good visibility. Have a high degree of confidence in future revenues.
New subscriber markets -- wireless organizers, web-enabled devices --- involve volume, cost, and price. As products become more sophisticated they're coming to VARL. Dual and triple-mode devices need Varil's sophisticated components.
Market still in infancy. Existing wireless infrastructure can't support bandwidth-hungry devices. One is contingent on the other. We're working with IBM, Glenayre, Motorola, etc.
Vari-l's first market is high-end infrastructure products. Subscriber products need infrastructure.
Press releases: We do our best to put out releases without hyping the stock. Most customers are competitors to each other and have provisions limiting what we can say.
Q&A:
Q: [Prime Charter, Ltd.] $20 million line of credit, are you using it?
A: 1st quarter is strong indication of sig. growth.
Q: [Branch Capital] Diluted shares outstanding, what is it due to?
A: We had stock options at year end, don't have numbers in front of me. If options are in the money, you have an increase of outstanding shares.
A: Jon -- a lot of options don't come in the money till half way through 4th quarter. That accelerates b/c of market price of stocks. So you had 3 full months of dilution. Warrants represented half of what dilution was weighted towards.
Q: Great quarter, could you talk about amount of units and percentage of capacity you're using on hand-set side?
A: Portion of handset capacity is being used to keep up with incredible increase on infrastructure side. Using about 50 to 75% of subscriber capacity for infrastructure. Using highly automated processes.
Q: What about LMDS and MMDS areas?
A: In infrastrure is strong in GSM base stations. We own about 80% of GSM space for our products. LMDS and MMDS is new market and we're pleased with rate of growth. Customers' products being accepted. Still a small portion of business. Largest portion is GSM basestation. What percentage LMDS and MMDS? 1999 it was 10 top 15%. Fist Q. cust. orders, they were 32%. We're seeing it grow.
Q: Economic drivers worldwide. . . ?
A: Couldn't comment without revealing customer identity. I can tell you we have Nokia, Eric. Mot, LU, and Siemens we have. Siemens the last player in the GSM marketplace. Increased demand in web browsers and PDA-type devices.
Q: If you have 80% of GSM, what % do you have of CDMA?
A: Don't have information but will get it to you. I'm pretty confident the rest of the year is bullish. Should be good year. If things develop as they are it should be an exception year.
Q: [American Frontier Financial] --- good quarter. Design wins in handset market?
A: Yes, we've had --- we did announce Stanford Telecom, acquired by NN, and acquired by ALA. Ramping in a nice way. Also MMDS by Netro. Ramping nicely. We announced Samsung --- in their smartphones. Two more customers who I can't mention who are developing and in production in smartphones. Also in PDA systems. Wireless Access, acquired by Glenayre --- for smart pager. Significant contract for them. PCMCI Type II cards for IBM, also.
Q: By Q4, what % revs will be coming from handset?
A: Can't say that. Too many caveats. Long term subscriber will be sig. rev. generator.
Q: Long term?
A: Usually in excess of 12 mos. Not less than 12 mos. Significant being 35% of revs.
Q: Is progress meeting your personal expectations?
A: Meeting and exceeding my personal expectations?
Q: Net margins? Any improvements?
A: I don't think so. I think we had a pretty profitable quarter.
Q: [Genesis Technologies] Jeff Stone. 32% of new orders were subscriber? Indication of how it will shift?
A: I just don't want to committ to how it will shift.
Q: One line operating?
A: Using it more than one shift. Using 75% of that capacity. We can do 3 shifts. Currently running about 75% of 20 hours a day right.
Q: New lines being put in?
A: LMDS chewing up a portion of capacity.
Q: Is second line up and coming?
A: Evaluating our requirements right now.
Q: Other buildings?
A: We're working on bldg. no. 5 right now, working with architects and blueprints.
Worth noting that 1Q has traditionally been the slowest quarter. Remainder looks very very strong. |
