More about NTRO...
Here's what Seth Spaulding, an analyst with
Epoch Partners, has to say about NTRO...
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Netro (Nasdaq: NTRO)
Report date: October 18
Metrics
Our EPS and revenue estimates for Netro are
($0.03) and $20.2 million, respectively, with
revenues growing 265% year-over-year.
Our Take
We expect the quarter to be in line with our
estimates, driven by strong sell-through to Lucent
in Europe. Upside could come from greater-than-expected
sales to relatively new partners Nokia, Motorola, and Cisco.
We believe Netro is on track to report a doubling of its
manufacturing capacity, which is critical to meeting
strong demand from customers in Europe and Latin America.
Issues to Consider
Keep an eye on the two things: 1) How much revenue is
recognized from partners other than Lucent. We do not expect
a great deal, but would hope for some contribution from
Motorola and Nokia; (2) How much has Netro increased its
capacity? The target for this quarter was to double from
last year's levels. Without sufficient capacity, Netro will
not be able to meet demand for its gear, or our estimates.
Without providing significant upside to our estimates (i.e.,
greater than 5%), the stock could suffer as its valuation
remains at the top end of the group.
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The above is an excerpt from a report which is available
at <http://www.epoch.com/>. This report begins as follows:
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Communications Equipment Earnings Preview
By Seth Spalding, Richard Shannon, and Ashwin Navin
10/16/00
On the eve of quarterly earnings calls, our communications
equipment companies appear set to offer investors strong
numbers. We expect Cisco, Netro, Foundry, UTStarcom, and
Sycamore each to meet our estimates, and the businesses
are looking good. Our detailed company previews are below.
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At this same website, I also found a 27-page PDF report
on NTRO that was released on 9/11/00.
Overall, I think it will be good news for STXN if other
companies in this sector are showing strength in their
orders and sales revenue.
With regard to NTRO, I think these guys are on-target
in their worries about NTRO's ability to scale up
their manufacturing capacity. I think there are two
parts to such worries: (A) Can they get the parts?
As we well know, there is an industry-wide shortage
of critical components... if you only need a few of
these components, it may not be hard to get them...
but when you start to need significant quantities
that story can change. (B) Can they put those parts
together into a quality product? NTRO has no proven
track record in this regard (except in small quantity)...
its one thing to say you can make & ship lots of products
but its another if those products don't work right and start
coming back for repairs. STXN has a quality manufacturing
program in-place with their contract manufacturers... they
make sure that any product they ship stays shipped.
Rob |
