FIBR CC Notes Part 5:
Steady progress...
One more fairly good conference call.
In general, my expectations were met but not exceeded. I now have more reasons to believe that this story will conclude, one way or the other, in the next two quarter (3rd. and 4th.). Chances of an ultimate positive outcome have further improved.
This is what I have been expecting:
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I believe "they" are who keep us from leaving. They are our fears of missing the big wave. They are our hopes, desires, expectations, etc., etc., etc., that Sorrento will be one of the leaders in the metro optical networking space. A serious, visible, recognized contender, if you will.
During the next six months or so I believe many things will happen. Growth of metro optical market will become more pronounced, establishing it to be one of the key technology areas to invest in.
Sorrento will have launched all pieces of its puzzle for the next generation all-optical network. This would include TeraMatrix, TeraMan, the versions of GigaMux and EPC specifically designed for carrier class customers, and possibly some new products. Within this time frame these product will have been evaluated by at least some of the initial customers. We may see initial signs of this at Supercom.
Sorrento will have two more quarters under its belt giving us a more clear picture business growth, market share, time frame for profitability, etc. The long term financing issues will too have been resolved by then.
With all these pieces in place a clear picture would emerge, not only for us on this board, but for the whole market to see. If market begins to likes what it sees, we all are going to be very happy. If it doesn't, it will be very hard for most of us to neglect that. As a result, we'll be able to move on, one way or the other.
<http://ragingbull.lycos.com/mboard/boards.cgi?board=FIBR&read=78965>
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The presence of some name brand analysts was a major improvement. The issue of preferred A - request for redemption - is a concern, on the other hand. It must be resolved in a positive way for the existing shareholders. I believe it can be. No near term guidance is not good, but understandable in this economy.
It now seems likely that Sorrento may get to break even point in the 4th. quarter. They should be able to do $30 mil. by then.
Back to waiting patiently. I believe that the worst is behind us.
FIBR posters, thanks for a synopsis of the CC. But was anything mentioned about our India connection and its market ripe for the plucking? Also the Terrabeam PR is only about 2 days old. I didn't read any posts on the extent of that relationship. Any comments long timers?
I see some of the Elks have returned. It's migration season I guess. Let's hope they aren't spreading any of that dreaded hoof and mouth disease. JMHO
pjr - you should have listened to the call.
-Xin introduced and passed the baton to JD
-JD immediately passed the batton to JA
-JA did the full financial overview, with fair reasons for chnages in certain focus items and then talked about margins, cost cutting and expected margins and expected cost cutting.
-JD then did the rest of the call
-Only when a questioner directed a question to the Dr or it was a technical engineering question did Xin give an answer
-JD closed
-Sounds like Xin is back in his sandbox with his toys and I am sure that he was feeeling more comfortable as were most of the shareholders
There were some great questions from new faces and I feel that the Terrabeam announcement may have dragged a few in.
Nothing can be said about Terrabeam as they are in stealth mode and Sorrento are going along with that - Q4 impact is my gut guessing
JD mentioned the criticism he had received at the beginning of the call and said they were working on addressing the issues and then reeled off a list of customers with AT&T being the first mentioned. Later there was a little dig at Ciena - firstly it was their press release and secondly like SCMR they tend to focus more on the long haul
It's one fiber with many many features is the new line!
Few concerns...
Though I remain optomistic, I have a few concerns. I've followed FIBR since the fall of 97 and their revenues just aren't ramping up that fast. They're still only at 14.5 million dollars. You would think with the gluttony of spending in the past two years we'd have some more revenue. My only hope is that now that telcos need to be a little chosier they'll go after us a little more.
Another question I had was if you look at the balance sheet you'll notice that engineering expenses went down. That normally scares me. Why did they spend less on engineering. Am I making a mistake?
My last question is on switch fabric vendors. Who is the company that provides their fabric (they are an OEO solution right?)? I know Cienna CoreDirector is an ASIC, but most companies use someone else's architecture. Who does FIBR use?
Thanks,
Mike
Wave of the Week at Changewave
"5. WAVE O' THE WEEK
Sorrento Networks (FIBR)--Sorrento Networks shares got a heady boost
after the metropolitan optical networking firm announced a
collaboration with Terabeam Corp. Through the deal, Terabeam, which
provides wireless Ethernet services, will use Sorrento's GigaMux
dense wavelength divisional multiplexing platform in its free-space
backbone network. The deal is a bow to the need for last-mile access
in metropolitan areas. In addition, Sorrento is expected to announce
earnings Wednesday. Sorrento shares closed Tuesday's trading session
up 36.1% at 9.99.
Each week we will list the stock that is the Wave O' The Day on our
website. You can also access this info by going to
<http://www.changewave.com> early each trading day and getting both a
Wave and a Wipeout O' The Day."
FWIW, the Series A redemption is not happy news to me. I did not believe the "they are strong hands" theory many proposed here, and this was why. While we cannot pay them out, I am quite sure they will end up getting equity in the "parent company". And that means to us DILUTION, let me restate it, MORE DILUTION.
But we have figured it in at about 3-4 shares of Sorrento for 1 FIBR I think. Well, hopefully it stays within that range. JA and JD both did say it would be structured to protect the interests of the exisiting shareholders. But well, we have heard that before.
Otherwise JD seemed very sincere. They need to stop having these fkups with initiating the call. Release the DAMN PR at 3:45 if you must, what is so surprising in it anyway? ...
Hopefully his promise of getting more professional will hold true in the next CCs. It was quite courageous of him to be up front like that. Well done JD. Xin did the "team player" bit well. I think they arranged for him to develop on JD's talk on the product strategy just to show that they get along well (which has been a cause for concern here.) The guy who asked the technical question and basically implied Xin must answer it - well, I thought that was a more natural instance of them working together, when JD tried to round off the answer.
All told, not a bad thing. Nothing spectacular, but we knew that bit already. Hopefully a couple of decent houses will initiate coverage in the next couple of weeks or so. We will see.
Good luck all! Goooooooooooooo FIBR!!!!!!
mjdauber,
The switching fabric - not OEO, it is OOO (all optical) and they are most likely using 2D MEMS from OMM, Inc.
R&D costs dropping might have to do with the OSMINE certification issue, for example. They said they are at a stage where they can either push it forward or go easy with it. Why would they do it I wonder? Only reason could be to save some money till they hit profitability. My GUESS would be that they have reached a stage where they have met all the main criteria/criticisms from Telcordia, and now just have to pay the fees and get the final verification and approval from Telcordia/Bellcore. Since they are watching the bottom line now, they might have decided to hold on the final stage till they can announce a major carrier contract, then do a financing of some kind, and use some of the proceeds to close out the OSMINE process and move on.
Otherwise, most of their products have been around, probably been beta-tested and improved with client feedback sufficiently such that any changes they may make now are incremental and do not incur huge expenses. That would be my guess.
Let us see if that is how it plays out.
Good luck! Goooooooooooooooo FIBR!!!!!!!!!
mjdauber,
Yes it is an all-optical switch. The grooming will be at the edge and it will be electronic, as it has always been. Maybe in 20 years everything will go optical when they make photonic ICs or something equivalent. But for now the edge devices (routers/switches) will be electrical.
But the Teramatrix is not an edge device, it is for the metro core network. It will sit at the nodes and switch wavelengths in the optical domain. It will be an Optical Crossconnect Switch (OXC) or Wavelength Switching Router, depending on your choice of phraseology. It will switch whole wavelengths, and also double as an add/drop device.
I recommend that you check out the Point-to-Point Networking tutorial sponsored by Sorrento Networks and the web proforum at <http://www.iec.org> |
