Egan was out telling the story to Dow Jones News yesterday -
NEWS STORY FOR ANTC 32
10/13 =Antec Chairman Wants To Start Dash Toward Profits >ANTC >
SYMBOLS: ANTC NLV SFA TCOMA TCOMB I/BRD I/CBL I/CMT I/ENT I/MED I/TEL N/DJN N/DJWI N/CEO
By Brian Steinberg
NEW YORK (Dow Jones)--Antec Corp. (ANTC) Chairman and Chief Executive John M.
Egan has cleaned the house and bought good booze, all in anticipation of having
a great party.
"The hors d'oeuvres are on the table," Egan told Dow Jones,"and the bartender
is ready and the party was supposed to start at 6. It's 7:15 and people aren't
here yet, but everyone says they're coming."
The party should kick into high gear when Tele-Communications Inc. (TCOMA,
TCOMB), which serves 25% of the nation's cable subscribers and owns 17% of the
company, begins to upgrade its infrastructure. Analysts expect the company to
do so toward the end of the fourth quarter.
Subsidiaries of Antec and TCI have formed a joint venture, Integration
Technologies, to provide design, engineering, and construction services for
various projects in the Englewood, Colo., cable giant's three-year upgrade
program. The unit has been selected to upgrade projects in the Seattle, San
Francisco and Salt Lake City markets.
In its current belt-tightening mode, TCI accounts for only about 5% of
revenue, Egan said, but if it resumes spending, that percentage could return to
20% to 25%.
"It's not a question of if, it's a question of when," he noted.
Egan seems to resent being held in the starting blocks, when all he can think
Despite the sluggish earnings reports projected, Antec CEO Egan said he
remains optimistic.
One of the reasons for the company's diminished third-quarter outlook is its
decision to maintain and increase production capabilities to meet industry
demands and the anticipated resumption of spending at TCI. Still, Antec said
its current sales levels are weak.
"We made our decision to spend our money integrating into HFC (hybrid
fiber/coax)," Egan said. "If the HFC market is slow, we're going to be real
slow, and if the HFC market is hot, we're going to be real hot."
Analysts who follow Antec believe it stands to do well if TCI comes through as
expected.
The cable-equipment manufacturer has had several quarters to position itself
for the next few years, noted Oppenheimer & Co. analyst Jim Jungjohann. "From a
fundamental standpoint," he said, "you've got a company that is operating in a
position where any favorable top-line revenue growth is going to show dramatic
increases to the bottom line."
Antec's dependence on TCI has proven a curse in recent quarters, even though
the company has made substantial efforts to diversify its customer base. Now
the link may prove to be a blessing.
Once TCI's projected upgrades begin, Antec CEO Egan said, "we'll do more
business in the second half of the fourth quarter than we will in the first
half, and we'll do more in the second half of the first quarter than we will in
the first half."
Although TCI hasn't discussed the upgrade publicly, Egan said he's
"comfortable that the desire is there, the money is there. I think the market
believes they're going to spend money, and we're here at work doing the
engineering to try and get it done."
A TCI spokeswoman did not return calls seeking comment on the company's
relationship with Antec or its upgrade schedule.
Still, the company has tried in the past to reduce its dependance on TCI.
Antec has made efforts in the past to target Baby Bells and international
markets. The effort appears to have paid off, since a spokesman noted that only
five of the company's top 10 customers are domestic cable operations, which
occupied all 10 slots three or four years ago.
Egan believes the burgeoning telecommunications market bodes well for Antec's
technology, which he likens to an ocean providing the waves for surfers. "If
there are no waves, it's a pretty boring party to watch," he noted.
As high-definition TV digital cable, Internet video and other technologies
I hope this is legible |
