3FQ02 CC notes:
EPS: pro forma -0.05, GAAP -3.19
Downsizing will continue, the goal is breakeven at 300M/Q sales. No bottom of business conditions yet seen.
We will not just survive, but lead this industry, when the upturn happens.
We are trying to increase the non-telecom part of our business, with some success.
Guidance: 4FQ02: sales 210-230M, pro forma -.035. Our book-to-bill was slightly under 1, better than recent quarters.
gross margin was 12%, or 26%, or 19% (depending on how calculated). Our gross margins will be low, as long as we have low capacity utilization, which is the main factor controlling our margins. Prices continue to come down in our industry, but that is not the main factor lowering our gross margins.
At 300M/Q sales (= breakeven), our gross margins would be "low 30s%". "Much higher" at higher revenue levels, but didn't give a number.
Our customers are focussing on cost reductions.
cash + eq. = 1.5B = $1.10/share
shares: 1.36B, up from 1.14B a year ago.
---------------------
my comments:
I've never listened to a CC where management gave 3 different numbers for gross margin.
Most other tech company CCs I've listened to, in the last 2 quarters, have said business conditions were at or past the bottom. Not this one. They repeatedly said they saw no bottom, and inventory drawdowns were continuing among their customers. Only EMC had a CC this depressing.
For an investor who wants to buy the bottom, to buy at the point of maximum pessimism, this is a CC which might make him buy. To any other investor, such as someone who wants some hints of an upturn before buying, this CC offered no encouragement. Well, maybe the BTB of almost 1 was a faint bit of hope.
Disclusure: I am long this stock, at $5-4.9, as of today. Haven't decided whether this is a trade or a LT holding, leaning toward a trade (sell at 6 and up), as their business hasn't bottomed yet. Looks to me like it'll be 2FQ03, at the earliest, before they show YOY revenue increases.
Corrections and additions welcome, I'm sure I missed parts (and didn't understand other parts). |
