fwiw, here's Goldman's review/preview (released today).
-----
Q2 review: Vitesse reported a slightly better than expected fiscal Q2 with sequential revenue growth of 12.3%, the third quarter in a row of sequential growth increases. Overall strength was driven by communications, with datacom revenues growing 20% and telecom nearly 17%. Overall top-line growth was stunted a bit by an 11% decline in ATE sales. As a result, we raised our fiscal 2000 estimates from $0.64 to $0.66 and fiscal 2001 from $0.88 to $1.00.
Q3 preview: We expect Vitesse to deliver solid revenues in the coming quarter with between 13% and 15% sequential growth a possibility. The strength will be fairly broad-based with Lucent, 17% of sales, likely to grow in-line with the corporate average. Revenues from datacom products are likely to be higher than the 15% expectation entering the quarter as will revenues from key telecom customers such as Lucent, Nortel, and Sycamore. Nortel, in particular, continues to be quite strong with revenues likely to be north of $5.5 million this quarter, up from $4.5 million in Q2. While OC-48 revenues are again ramping up at Lucent, OC-192 revenues should also show solid momentum growing from $5 million in Q2 to $7.5 to $8 million in Q3 from both Lucent and Fujitsu. ATE sales, however, will limit overall top-line growth as weakness at Schlumberger continues and will likely decline another $1 million plus in the quarter.
Although fundamentals continue to strengthen, we are uncertain whether this strength will be enough to offset the dilution coming from the SiTera acquisition and still enable us to take our estimates significantly higher in the intermediate term. Although we are very positive on the longer-term Vitesse story and the implications of the SiTera acquisition, with the nice run-up in the shares recently we would wait to get comfort in out-quarter estimate revisions before becoming more aggressive with the shares.
VTSS recent developments:
4/10: Vitesse introduced two chips targeting the broadcast video market, specifically HDTV applications. The first product is a clock and data recovery chip, the second a dual function serializer/deserializer or deserializer with reclocking output function.
4/27: Vitesse announced the establishment of a venture fund targeting communications related companies. Details of the size of the fund were not immediately disclosed.
5/1: Vitesse announced an enclosure management controller device supporting 2Gb/second fiber channel disk drives through the Enclosure Services Interface (ESI).
5/15: Vitesse announced a 10Gb/s chipset for OC-192 applications consisting of a 16:1 multiplexer and 1:16 demultiplexer. Vitesse announced that these devices are the first to be manufactured utilizing the company’s proprietary H-GaAs-V process at its Colorado Springs 6-inch GaAs facility, which reportedly allows Vitesse to offer the products at lower prices than competing solutions.
5/25: Vitesse introduced an OC-48c Packet/ATM over SONET framer, which integrates all physical layer functions of serial clock and data recovery, clock generation and multiplication, and multiplexing/demultiplexing.
5/31: Vitesse introduced an integrated IC, the VSC7148, featuring all the functionality to support a sixteen drive 1Gbps fiber channel arbitrated loop JBOD subsystem. The VSC7148 is complemented by the SSC100, which supports diagnostics functions.
6/1: Vitesse introduced a 3.2Gbps line driver targeting next generation 10Gbps Ethernet, OC-48 SONET/SDH, fiber channel, and DWDM applications. The device claims dissipation of 400mW and requires a single 5V power supply.
6/6: Vitesse introduced a 2.5Gbps SONET/SDH pointer processor and a 40Gbps STS-1 Time Slot Interchange (TSI) switch; these two devices are the first in the company’s TimeStream family of products. |
