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Strategies & Market Trends : Technical analysis for shorts & longs

SPY 688.98

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Jan 22 4:00 PM EST

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To: Johnny Canuck who wrote (32950)	6/21/2001 5:27:17 AM
From: Johnny Canuck	Read Replies (1) of 69962

RSTN Earnings CC June 20,2001 Note: Rev up 26 percent Q-Q. International rev 39 percent of rev versus 42 percent last Q. BTB > 1 EPS: loss of 3.6 mil vs 5.5 mil Q-Q, 11 mil Y-Y Share count 107.5 mil. Gross Prodit 56.6 percent. GM stable due to increased volume and mix. Sales and marketing expenses 30 percent of rev. Flat Q-Q . 47 percent Y-Y. G&A 11 percent of rev. Flat Q-Q. 18 percent Y-Y. Interest income 2.3 mil vs 594,000 last Q. Cash 176 mil versus 195 mil last Q. DSO 55 days vs 52 day Q-Q. DSO 57 days if you include pre-paid service contracts. [Not sure what the difference is there.] Inventory 13.6 mil up from 11.2 mil last Q. Turn 5.9 vs 3.2 last Q. Telespace(?) only 10 percent customer. Expect that to fluctuate Q to Q. Head cound 486 vs 472 last Q. Most sales staff added. Q2 Guidance: -Rev low 20 percent Q-Q growth on 44.2 mil -GM improved going forward. Expect 57 percent but depends on mix, cost of components etc .... -R&D 28 percent of rev -Sales and marketing 28 percent of rev -G&A 9 percent of rev -Interest income 1.5 mil to 2 mil -Short count 107.5 mil flat -Head count 525, mostly sales and engineers Y2002 results, up 155 percent Y-Y on rev, loss of 1 cent CS will spin off rest of CS in July/Oct time frame Strength due to focus on metro market where demand is strong, best of class routing products, products allow cost effective use of legacy products. Metor strong as ILEC enter the space due to core glut to try to make money. Use to be dominanted by CLEC's. Expecting shift to more ILEC's in space. Slow down in DSL deployments and bandwidth core glut driving carriers to deploy more tradition telecom connections such as T1/T3/OC12 connections to customers premises. Europe seeing strength due to MPLS allowing customers to configure bandwidth for a variety of services. RSTN products have a rich feature set. Asia is strong. Korea has 30 percen broadband penetration. Highest in world. Need edge products to get use of that bandwidth. Japan has a massive ATM back bone. Same deal. Broadbandd requires faster mtero hook up. New cstomer growth world wide. Expanded sales force and partnering bring new opportunities. Q1 add ZTE Corp in China as a partner. Teamed with SONS for VOIP. Seeing strond demand from Q and Timer Warner as examples. Teamed with TLAB to take advantage of DOCIS 1.0 to DOCIS 1.1 transition. Also looking to work together on voice/optical products. ZTE in China has 1 bil in rev last year. Will sell RSTN products under the ZTE name. Summary of Q&A: Visibility good since strong backlog in last month of Q. Overseas partners bring new customers. US wins with ILEC's expected as many RFP's out. Traction with TLAB business. New products such as 16000. TLAB miss will have no effect on TLAB associated business. Planned for slow ramp. Going as expected. DOCIS transition will not really happen till early new year. Mainly looking at ILEC business. Expect to target mostly ILEC business going forward. By end of year most Tier 1 opportunities. Many new RFP's out there for metro space. Before they were going away and writing an RFP frame work, now looking to trial then do RFP frame work. Some looking at IP over DSL. others looking at GigE. MPLS. IP router points. Transition to new plant did not effect DSO's. SONS, TLAB and other partners were slightly more than 10 percent of rev. As for competitors, for RFP's with Ethernetseeingg EXTR and CSCO. For those without ethernet mainly CSCO. Seeing some start up announce product, but not ready to ship. RSTN should be ready when they are. Have not missed any key technolgy. Don't see 10 GigE taking off till next year. Pricing is still too expensive. No inter-op. Standard still not done. Cost of optics most of problem. A cheaper alternative right now is DWDM if you just want to get the data there. Looking at wireless strategic partnerships. Expect most of opportunity to be mobile. GTRs/ 2.5 G/#G will drive demand. DOCIS certification will ease transition. Tax rate 36 percent. No pricing pressure across all product lines. Most orders were more worried about volume and quick delivery. Margins held. Oversupply of components helped with pricing from contract manufacturers. Bankruptcies not effecting RSTN. Demand is such we can trun away business. Sales forece review business plans and willask for letters of credit to insure payment.

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