Mark,
I'm not telling anyone to buy or sell Westell, but I'm fully aware of the pricing pressures within the ADSL market since 1996 and the JPC contract. The name of the game was DSLAM market share and forget about making a profit until mass market.
You're correct, I'm theorizing on an inventory issue. I'm providing an explanation on why 3Q will have 30-35mil in revenue and 4Q will have 60-70mil. I certainly haven't gotten this from Westell, since they will NEVER provide this type of information.
I have 630K modems produced in 6 months by Westell. I've provided URL links to SBC and Verizon numbers, which didn't come from Westell. Since Westell doesn't provide them, we look in other places... www.dslreports.com, www.xdsl.com, www.dslprime.com, etc.
I agree that management has provides a top "100" list on why we should be upset:
1) 5-6 stock price
2) Nelson selling near 40 and MZ selling in the 20's.
3) Having a road show pumping the stock a month ago,
4) Holding a 35 minute CC and cutting off the question and answer session with.. "the market is about to start".
5) Westell not releasing information to perform DD.
6) Having A and B class shares,
7) Penny trust holding over 50%,
8) providing reasons why insiders sell, but can't provide reasons for a failed 2Q and downward revised 3Q,
9) the ILEC's have been jerking your forcasting group around for years...
10) Westell still can't forcast, in 1996 mass market was only a year away with a CAP based modem.
11) Always hiding behind that.. "can't disclose that information until our customers allow it".
12) etc...
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EFNT was at $61M two quarters ago and had 20% margins. Why was WSTL at half that in their CPE line when they were at $62M?
>>
WSTL was selling a single CPE DMT modem for mass market deployment. A low cost, low margin easy to install external modem for ILEC end-user deployments. They developed a UBS external modem and it was released in June. WSTL sold 350K of these CPE DMT ethernet modems in 1Q {April-June} for 62mil.
You want me to compare this single Westell modem against the entire EFNT CPE product line. Westell doesn't sell IDSL, SDSL, VPN's, ADSL routers, etc. Westell does sell TAP equipment to SBC, but they don't include those sales in CPE.
I would be surprised if the EFNT ADSL modems had a 20% margin. |
