ADTN CC Jan 14,2001 Part 1
Q1 guidance:
No backlog as it is a ship and book business, telcos buy when they add new digital services
Q1 usually the lowest rev period of year, but expect no change over q4 this time
Q1 rev 85 to 90 mil
GM sames as Q4
Op Ex will be higher than Q4
Tax rate 28 per
Share outstanding the same as Q4
EQ4 EPS 9 to 11 cent
ADTN demand tied to op ex not cap ex.
Cap ex estimated to decline 35 to 30 percent in 2002
Seeing the telcos have unusually low inventory
Re-use programs at telco now near the end, so should start to buy new equipment
Esstimate flat 2002, unsure of 2n half recovery
With flat estimates then for year
375 to 400 mil for year
GM 45 to 50 percent
EPS 40 to 50 cent for year.
With 2nd half recovery
Rev decline 16 to 17 percent, rest of industry declined more for year
Q: Any recovery in telco or enterprise? Any segment leadingÉ
A: Too early to tell. Enterprise usually leads telco though as the enterprise usually order their equipment and then gets the telco to connect.
Q: T1 line growth? Pricing?
A: Will be flat. Sweet spot for business communications. Will expect it to recover first. Pricing stable. Segment now mature. Will see single to 10 to 15 per area declines.
Q: Guidance on Q1 numbers? EPS 9 to 1 per. Op Ex increase in amount of charge this Q?
A: Tax rate will be 28 per, was 12 percent. Q1 also includes start of accural of payroll tax expenses.
Q: Did T1 ports shipped exceed T1 installation by telcos?
A: Lines exceeds ports shipped due to reduction in inventory by telcos and re-use program.
Q: G.HDSL rev? Any pick up in deployment in Europe?
A: No activity in domestic market. Shipped first to Asia-Pacific. Shipped and recognized rev. Will expect to announce more wins next Q and by mid-year. Ramping now. Customers appear to like it.
Q: If ramp in G.HDSL will that mean decline in domestic HDSL sales?
A: Flat EPS overall. Hard to predict mix. G.HDSL is a small portion of rev. May make estimate look conservative if they ramp.
Q: When will North Amer. demand G.HDSL? Europe?
A: With domaniance of market by ILEC's it may be years.
Q: Where are we in transition from 2 wire HDSL to 1 wire HDSL? Is majority single line?
A: We are there now. 90 per of line that can support 2 wire now install 2 wire. HDSL. Market share strong. 70 per. 2nd gen product intro this year. 70 percent 2 wire/30 percent single wire overall segment break down. Improved margins. Third gen intro before summer. One ILEC so far has switch to 4 wire use. Required fewer repeaters. Rest of ILEC's will follow. 100 percent transition will be 12 to 18 months.
Q: Voice over DSL?
A: Technology still in early stages of deployment. Hard to tell level of demand. Jury still out.
Q: ADTN pointed at T1 lines, what extent will carriers by oriented to T1. Will they go to T3 or higher speeds?
A: ADTN has number of T3 products and OC3 products. RBOC's still doing major volume on T3 as it related to slower speeds is due to market acceptance that 1.5 megabits is sufficient for end customer. Looking forward common speed range will move up from T1 to T3 and OC3 area going forward.
Q: M1-3 MUX and DS3. In the physical layer over the last mile, we don't see much T3. Will the end user service by dilevered over fiber then?
A: Yes, will be delivered over fibre for DS3. All RBOC's evaluating this.
Q: Any plans for OC12 and OC48?
A: OC12 yes, OC48 further out?
Q: Which products will generate the most excitement next year?
A: From rev point of view, could be significant. SONET/opitcal interface for our SONET/OC3 multiplexer. Higher voluume last mile market place.
Q: Digital loop carrier product? Any significant rev this year?
A: Yes, number of approval for total access 3000 and 5600 shelf. 3000 being deployed by 1 ILEC. Under approvals by a number of others.
Q: Strength at end of last Q, in carrier or enterprise?
A: Both, december strongest month of Q traditionally.
Q: GM 45 to 50, expect most of rev growth at end of year?
A: yes, if rev does not start to climb later in year.
Q: Head count down and raises cut last Q. Will raises later in year effect Op Ex.
A: Reduced salary cost, but also reduced misc. categories. |
