BRCD CC and other
Bill Murphy - IR
Greg Reyes - Pres
Mike Byrd – CFO
CC
Greg
- seventh seq quarter of profitabilty
- 165M in rev, up from 132M last q
- Deferred rev 9.1M up 7.1M
- Generated 56M in cash
- 0.13 EPS and up from 0.11 last q
- World leader in SAN infrastructure
- 61% of SAN infrastructure market share, up 2% q2q
- Largest installed based, shipped 750K total to date
- Dataquest said 69% of storage base on fiber storage in 2004.
- Met every milestone on products
- Concern about softening economic climate and the effect on our customers.
- SUNW qualified BRCD products
- Has relationship with every storage provider in the world
- 6400 product has twice the port of anyone and 2/3 the footprint
- GE Access and DELL micro signed on as resellers
- Invested million in interoperability
- Deployed largest SAN in lab, over 1000 ports.
- CPQ delivered a SAN with 20 BRCD switches
- Partnered with many including VRTS on San infrastructure
- Deutsche Telecom standardized on BRCD switches in Europe.
- Seeing 10-13 terabytes of info backed up at companies using BRCD based SAN
- Mike
- 165 in rev
- International up to 27% from 22%, y2y
- Netinc 32.5M
- 0.13EPS vs 0.03 y2y
- GM 60% up 0.2%
- R&D up
- SG&A 28.3M
- Operating income 26.9%, up 0.2% q2q
- 56M in cash generated
- CASH 211M
- 9.1M in deferred rev, half was 6400 series
- DSO 63 days, target 50-60 days
- In Nov had good visibility, now getting low visibility from some customers.
- Growth in q2 is modest to flat
- Q3/q4 consistent with market and 100% y2y
- SAN has emerged as next big growth center
- IT managers want fast return on investment,
- SAN will continue to be high priority for companies
- SAN vs. NAS, SAN is winning
- SAN Fiber channel vs. IP networking debate is sputtering
- IT managers may defer now, but must play catchup next half
- SUNW will generate sig rev last half of year
- Headcount will increase 200 employees
- Continue aggressive in international markets, targeting Europe and Asia
- Taxrate is 30%
- Shareout is lower than anticipated
- Being conservative unless economy continues to worse.
- Guiding 0.60 for FY2001
- Greg
- Data storage is continuing to grow
- SAN will be the most strategic investment a company can make this decade
- No one better to deliver on SAN than BRCD
- Q&A
- MSDW – clarifly guidance for q3/q4?
- A: Growth is 100% y2y, and 19% for q3/4
- MCDT?
- A: No losses to MCDT, won three telco deals with the 6400, seeing the trend go to mainframe attached storage.
- ML: Clarify forecast? Confidence in Q3/Q4? Growth of old vs. new customer?
- A: Shortterm is a confluence of conflicting of datapoints. Historically, we had 100 days of visibility. Now it is less. Reluctance of channel partners to book orders out that far in advance. Customers rethinking IT spending budget. Seeing bigger deals with large conservative customers in the funnel. Not tied to Alan Greenspan. Our forecast has no rev for SUNW this year. Feel SUNW will be upside and large OEM will be upside.
- Existing SAN vs. new deployments?
- A: Hard to tie it to specific orders. Feel that 50-60% demand is from companies that piloted SAN and now deploying it system wide.
- SSB: Deferred rev, why spike? Migration to direct sales approach? Cancellations?
- A: Don’t sell direct to end users. Going to double the size of our direct touch organization. Feel large hetrogeneous SAN deployment will take place. No end user pushouts. But seeing one or two levels or signature authority required. Deferred rev had some early 6400 shipped, but waited to count this until sellthough occurs.
- ML again: What clouds visibility?
- A: Conservative forecasting on our channel end field. Smattering of segment that were strong last year and not strong this year like dotcoms and telcos.
- GS Laura: Re:19% growth, why so confident in q3 since so close to it? Any areas where spending is not pushed out?
- A: Companies are rethinking IT spending. Many seeing benefit of SAN deployment as for optimizing personnel. Not seeing sig pushout or competitive losses. Seeing break up of projects into mulitple phases. No segment of IT that will be impacted other than storage will fare better than others. Our forecast is going to be very strong. Feel not much for SUNW. Large programs will come on board.
- What do you need to see for non flat revs? Who offers 6400?
- A: Only 2 weeks into quarter. We see modest growth, but will be conservative. Our channel partners are conservative. Incredible amount of demand for 6400. 3 OEMs probably will offer this product. This products address highport counts. Portcount aggregation will be an important trend. It is 50% less than competition.
- RS: OEM vs. Integrators?
- A: About 25% (Intregrators?)
- Visibilty better or worse last two weeks?
- A: Feb forecast review was a dispointment due to slow start. Hopeful that we will see a increase in demand
- DRW: 80% of rev was seven customers?
- A: Yes
- International?
- A: Europe bearing the fruits of our investment there. Europe embraces the open system market. Big Austrailia and Singapore wins. Not know if leading or lagging indicator.
- JPMHQ: New products? SCSI initiative?
- A: We our next gen ACIS back. Had good success at the system level. Will have software announcement simplifying switching in storage and offer more security. Working closely with CSCO on I-SCSI on interoperabilty. Comfortable with our architectural strategy going forward. Multi-protocol platform with CSCO will have more announcements.
- ET: Timing of coreswitch product?
- A: Three of our OEM will introduce a 1.2 SAN offering. Not an architectural moving in core platform. Coreswitch may show in deferred revs.
- TWP: Inventory spiked up. Interoperability with other switch companies.
- A: Deferred revs are recorded as inventory. Some safety stock on the books. We have maintain constant interoperability for our product and worked on fiber channel standards. Not an issue with vendors. We are the industry and defacto standards. They must conform to us. Hetrogenous SAN must connect multi-vendor server to other multivendor storage. CPQ must be able to talk to EMC.
- Headcount?
- Up 200 to 900. Add 200 in coming quarter.
- How maintain margin when rev flat?
- Cut some IT consulting and less engineer piloting.
End of CC
Good CC. I could see how some could twist a statement and make this look bad. I like the management and they have proven results of meeting estimates. Until proven wrong, will stick with them.
Jack |
