TranSwitch Corp: Will they get Zenith Business? Message Board

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Technology Stocks : TranSwitch Corp: Will they get Zenith Business?

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To: The Ox who wrote (655)	10/17/2002 5:22:31 AM
From: Johnny Canuck	Read Replies (1) of 669

Hi Michael, I only managed to hear the first 15 minutes of the call, but i think I will stay away from TXCC for a while. By the sounds of it management does not expect a turn around till well into 2003. They are seeing interest in new products, but end user demand is still very uncertain. They only mentioned one company that has a end user lined up and they don't expect to ship till the fall of next year. They are down to $106 mil in cash with $114 mil in notes outstanding due in 2005. Their BTB was less than 1 (no surprise given their exceptionally low revenue). They expect to burn 17 to 19 mil next Q, most of it R+D due to new product developments. They will lose 20 to 31 cents a shares next Q on rev of 3.1 mil. There are 90 mil shares outstanding. They bought no shares or notes during the Q. It looks like they will burn 1.2 to 1.6 mil a years in interest expense on the notes. Given the current burn rate (which gives them about 5 Q's of cash) and their move to the small cap NASDAQ listing that will make it harder to raise additional capital, this company has some serious challenges ahead of them. I think I will look futher up the food chain at companies with no debt, lots of cash and the potential of the greater gross margins that normally come from system sales as opposed to chip sales. In another vien, at least a company like ESST has $4.16 in cash, no debt and is still operationally cash positive.

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