TCL (their largest customer) is giving some business to ADI and MOT, but nowhere near ALL of their business which seems to be what the market is discounting! Just remember that they have cash of $10 per share which will no doubt increase with next quarter's earnings (I estimate cash will increase another $1 per share even after the downward revision of Q4...see below). And kudos to WVCM management for not caving and accepting orders from Sewon who has questionable credit!
Sometimes the market is not rational which creates incredible values...I saw it in SWKS in July/August and I'm seeing it in WVCM now.
wavecom.com
Wavecom Provides Fourth Quarter 2002 Business Update
Issy-les-Moulineaux, France - December 05, 2002
Wavecom SA (NASDAQ: WVCM; Euronext Nouveau Marché: 7306), the world’s number one provider of integrated wireless modules, today announced that, based upon information currently available to the Company, it anticipates revenues for the fourth quarter to be between €132 million and €140 million marking a sequential quarterly decline from €171 million in the third quarter. The anticipated decrease in sales revenues reflects the cancellation in early December of certain orders by TCL Mobile of China, Wavecom’s largest customer, and the fact that deliveries have been suspended to Sewon, a major Korean customer.
TCL Mobile, which accounted for 77% of Wavecom’s sales in the third quarter, has asked Wavecom to renegotiate the terms of some purchase orders, thus allowing them to cancel certain deliveries. “We believe that this request was prompted due to an apparent build-up of handset inventories within distribution channels in China”, stated Aram Hékimian, Wavecom Chief Executive Officer. Hékimian added, “Our relationship with TCL is extremely important to us and we believe it is in the best long-term interest of Wavecom to grant their request to cancel certain orders of WISMOs.”
Although Sewon has not cancelled any orders, they have recently been unable to open a letter of credit for delivery of Wavecom products. “Wavecom maintains a strict customer credit policy and frequently requires the use of letters of credit in order to guarantee payment”, said Deborah Choate, Wavecom Chief Financial Officer. Choate added, “This policy, along with ongoing monitoring of all our customers, is essential for us to effectively manage our commercial and geographic risk.” Sewon accounted for less than 10% of Wavecom’s sales in the third quarter.
Commenting on these developments, Wavecom Chairman Michel Alard stated, “We are very disappointed in these unexpected developments and are monitoring the situation closely. These short-term results, however, do not put the Company’s long-term strategy in question.” Alard continued, “We expect to sign additional new contracts soon which, when combined with the long list of those we have already signed over the past year, should bring us to a stronger, more balanced customer portfolio by mid-year 2003.”
Despite the expected 18% to 23% decline in sales from the third to fourth quarter, Wavecom expects that product gross margin for the fourth quarter will exceed the Company’s target of 30% of sales, while the operating margin for the fourth quarter will most likely fall short of the Company’s target of 12% of sales.
A conference call is scheduled for financial professionals at 10:00 am (Paris time) Friday, December 6 (with simultaneous webcasts on: www.companyboardroom.com and www.wavecom.com) and replay of this call will be available beginning Friday, December 6 from 7 am EST (1 pm Paris time) until Thursday, December 12 by dialing: 1 (866) 239-0765 (US only) or +33 1 70 70 82 10 from Europe, Passcode: 729546. This webcast will be archived through Monday, January 6, 2003.
Wavecom fourth quarter/full year 2002 revenues will be published on January 22, 2003. Fourth quarter/full year 2002 earnings will be published on February 11, 2003. Both announcements will be followed by a conference call (with simultaneous webcast) for financial professionals.
Download(s) :
About Wavecom :
A world pioneer in innovative wireless solutions, Wavecom was the first company to commercialize GSM technology in the form of a standard module, the WISMO, making wireless technology available to everyone. WISMO modules are compact devices that include all of the hardware, software and other technology needed to enable wireless communications over the GSM/GPRS, CDMA and future 3G networks.
WISMO modules enable any equipment or system to communicate without a fixed line connection. Applications include mobile telephones, personal digital assistants with wireless communications functions, automotive navigation and information systems, and devices enabling machine-to-machine communications.
Founded in 1993 and headquartered near Paris in Issy-les-Moulineaux, Wavecom has subsidiaries in Hong Kong (PRC), Seoul (South Korea) and San Diego (USA). Company revenues totaled € 322.7 million in 2001 and € 415.7 million in the nine months ended September 30, 2002. Wavecom is publicly traded on Euronext Paris (Nouveau Marché) in France and on the NASDAQ National Market exchange in the U.S.
www.wavecom.com |
