Yes, it helps explain it all, something WSTL management chose to skirt.
I said my VRTA analysis was shipment or inventory build. These bozos chose the latter.
I will quibble about the numbers however, presented by the analysis in that it overstates modem shipments by understating ASPs for VRTA. Even VRTA said in the CC that their ASP did not decline by 20- 25% as this analysis alludes to . I can attest that VRTA chips are very close to the $20 figure I originally used, but somewhat less this past qtr. Next qtr should drop by about 5%.
I also think the VRTA comments about WSTL ordering the quantities this qtr as mentioned in this report only bode worst for WSTL since it seems it will add to inventory again.
How? because ANY VRTA chips bought are an ADD to inventory this next qtr and even 30 days allotment for March qtr will ADD to inventory relative to the shipment rate which is under 300K. My calculations based upon VRTA guidance (which I trust better than MZ) is WSTL will buy additional 200K chips just to keep the pipeline going with a valued supplier only to see 300K modems shipped. So how much inventory is drawn down from that 90m?
About 15-20m and maybe a little more in March qtr. Thus MZ is gambling again for a renewed order to start making a profit.
Gambling with the shareholders money, lord knows he has no cash!
Enough with the bad! VRTA, however will be a great little buy in the coming months because of the product portfolio they have and the time lines for them plus their aggressive add-ons for customers. They have an Octal chip set for the CO environment where they have little exposure to date. They will have a far superior offering in the SDSL area and, when linked with its Helium CORE should translate into the lowest cost L1/2/3 solution for current customers.
A customer would be foolish not to entertain this solution in the future if they already committed to Helium. WSTL for example could make this switch in amatter of 2 months when available, as they already have migrated their base CPE platform in that direction. I don't expect this move until late '01, but you should see a $50 price point for the manufacturer then. A way to fend off the competition (Samsungs, Hyundais,etc.).
But alas, tis next year, if you trust the head of the beast to keep this ball from the gutter. Wonder what kinda hook MZ has in his delivery? |
