Thanks from the bottom of my heart. I hate the fact I can't listen to the CCs.
Just for you, the opening remarks:
JDSU conference call, April 25, 2000
Opening by Kevin, Josef, and Tony.
Meeting second request of DOJ for information. Everyone is cooperating. No public disclosure at this time. Remain optimistic.
Numbers: $395 million in sales, up 40% sequentially, 155% y/y. Demand is strong. Internal growth, 22% sequentially. Modules 30% vs. 33%, up 24% sequentially. Above guidance. Pleased with capital expansion.
LU 22% customer, NT 16% vs. 14% last year. Lots of new customers in the metro space.
51.9% gross margins, vs. 50.6%
R&D 8.4% vs. 7.7% (included OCLI) Continue to be productive. 40 new products announced at OFC.
SG&A --- 12.4% vs. 12.0% (Incl. OCLI)
31.1% operating profit. $123m, up 40% y/y, 13% above consensus.
Tax rate 35.3%, ytd rate 34%. 814 million shares outstanding, including OCLI. EPS .11 vs. .10 consensus.
Cash flow $93 million in operations, 62 m in Q2.
$963 million cash and short term, 20 mil in long term obligations (from acquired entities)
$77 m capital spending, more than covered in operations.
DSOs 60 days
Inv. turns 3.9X (higher rate of growth)
Governments are targetting stock option gains --- reported as charge. 3Q payroll taxes were 8.6 million, tax deduction of 482 million. Some are excluding these from pro forma. Had we done so, so EPS would have been affected. July 1 we adopt 4/4/5 fiscal calendar (not sure I got that right). This eliminates account closings in middle of week.
Oracle implementation: first phase US and Australia on schedule, cut-over next month.
Trend is to higher speed modulation. 10 gigs is standard. Orders from all 3 early customers. 60,000 sq. ft. facility for 10 and 40 gigs in Conn. Begun sample shipping of 40 gig. 20,000 sq. facility for receiver side. Eventually we be expanded to 100,000 sq. ft. 10 gig photo diode orders.
10 gig electro-absoprtion lasers --- began shipping --- began developoment of 40 Mw source chips to another customer. (Did I get the wattage right?)
Strong trend --- more customers outsourcing. Optical amplifiers --- 2 major orders from new customers.
Began shipping RAMAN --- building new facility in England for 980nm pump package. Clean room turned on last week-end. Began shipping in Zurich.
How company will accelerate revenue growth:
1) long haul and submarine
2) cable TV
3) Metro --- naiscent -- calendar year 2001 build up
Demand is incredibly strong. Why an optical market for years to come? We have to change how we think. We have a silicon model. one to one between user and PC. Bandwidth doesn't have that relationship. Must add more wavelengths. This requires new components. Higher modulation speeds equals more advanced technology. Going from 10 to 40 gigs. Design and manufacturing becomes more complicated. Instead of linear demand, we have more users requiring more bandwidth. This requires more wave lengths and more components.
Material science --- PC model is silicon. In fiber optics there are 14 different materials sciences involved. The way you provide bandwidth is (to have) equivalent number of components. Growth for years to come.
Chronos acquisition most important. Optical switching is huge. We evaluated all alternatives and agreed 3-D MEMs is for the future. Long haul and metro switch becomes practicable.
Bandwidth dependent on more components. Manufacturing becomes key to evolution of company.
CEO fo OCLI:
Update on manufacturing:
Highest priorities to ramp manufacturing X4 and drive costs down 15 to 20% per year for next couple of years.
Demand is compelling. We must accomplish this to be competitive.
1) Improvement in existing infrastructure
2) Invest in automation for labor-intensive areas
3) Outsource
4) Expand capacity
Progress has been significant
I Passive components and modules have 50% unit production improvement. Originally in basic manufacturing principles --- better work flow, supervision, management, supply chain management. We splice 67% more rapidly than 1 year ago. Will double this.
II Automation -- numerous activities under way. Opportunities for more gains are significant: testing inspection --- SWS is example of improvement. We've used tunable lasers for each test station. ow sahre 16 stations at once. Center piece assembly: with help from auto industry, increased labor production by 75%. Will use this in entire manufacturing process.
III Outsourcing --- to date we've done little. Evaluating now. This will be in modules. Components remain in-house. We will re-deploy facilities for other products.
IV New greenfield capacity. All locations are growing. 1.2 million sq feet last July. By the end of Q3 we had nearly 3 million sq. ft. By end of year it will be 3.4 million sq. ft. We are on path for 4X output, plus lowering costs.
Tony: CFO:
15% or better sequentially was the guidance. This should be upped to over 20% for 4Q. Challenge is to expand capacity. $480 million in sales. 1.9 billion run0rate. 50% gross margins. 28 to 30 operating profit. 34% tax rate. 840 million shares outstanding.
FY2001 over 75% sales (without ETEK), to over $12.4 billion. New opportunities emerge every day. Challenge is to expand fast enough. We are being conservative. |
