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Technology Stocks : PWAV- the hot new IPO

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To: JOHN CHEN who started this subject	1/24/2001 12:15:07 AM
From: david matherly	Read Replies (1) of 1491

cc notes...in my opinion this was a very positive conference call... -will be announcing before market opens tomorrow morning a huge 3G contract with Nortel for minimum 140million for 2001 with initial money coming beginning immediately and increasing thru the year... -also, a second unnamed OEM that is lagging Nortel by about 1 quarter with another 3G order that may equal Nortel's... -they may take a little bit of a hit in revenues in Q1 as they have decided to go full blown move into their new production facilities immediately... -their strategy is to get moved into these new facilities quickly and ramp up production immediately to better serve all of the OEM's and prove to the OEM's they are the number one company to come to for all their 2G, 2.5G and especially 3G power amplifier needs... -they are (conservatively) increasing their 2001 revenues from their previous 600-650 to 650-700 million...they are keeping their earnings at the same .85-.95 per share for 2001 due to the cost of moving into their new facilities... -Cingular Wireless and Verizon Wireless each represent 10% of revenues -Nortel represents about 45% and decreasing..NOT in dollar value-that is increasing, but decreasing as they gain new customers and present customers also increase their orders from Powerwave.. -Some of the OEM's have their own captive(in house) production of power amplifiers but there is an increasing tendency to outsource these amplifiers and Powerwave is their to fill their orders... -I did not have time to to re-listen to the conference call but I believe I understood the Nortel $140M contract to be a WCDMA contract and that the mysterious 2nd OEM lagging Nortel buy 1 quarter with a possibly equal contract order to be WCDMA also... -Also, the CEO said that he had just been in a European capitol talking to a European telecom executive and that this unnamed executive was determined to be the first European telecom company to have full blown 3G wireless technology in place in Europe...so it appeared that there would be more power amplifiers needed there as well... -500 3G amplifiers was sold to one OEM and another 100 or so (including some for testing) to another OEM.. -also, it appeared that as of last quarter, 3G was only about 2% of their revenues... -6 month 84.8M backlog -they have new GSM to TDMA overlay contracts that will be using their higher margin multi-wave amps -Q1 will be slightly disrupted due to moving into new facilities, but any lost revenues will be more than made up for by the end of the year -$250M will be for NEW products in 2001 -because of their new aggressive pricing and volume production procedures, the margins on multi-wave amps will decrease somewhat but will be made up for in volume production... -other than captive (in house) competition for power amplifiers, one other non-captive competitor has emerged for 3G, it is a WCDMA Japanese company...so the competition is for WCDMA.. -there are more than 1 other OEM presently evaluating 3G products from Powerwave -4th Quarter revenues were 60% multi-wave and 40% single with multi-wave increasing quarterly -will rapidly ramp up to shipping 1000's of 3G amps per quarter -companies main focus right now is to bring production levels up for 3G -captive OEM's are becoming much more receptive to possible outsourcing alternatives... -market is growing 30% so Powerwave will grow at least as much... -gross margins for 2002 will be in high 20's david matherly

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