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Technology Stocks : Aviat Networks

AVNW 23.29

-3.6%

3:59 PM EST

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To: The Ox who wrote (197)	9/18/2008 5:55:10 PM
From: Rob Preuss	of 312

Briefing.com notes that actual reported EPS was $0.08 vs analyst consensus (First Call) expectation of $0.06. Noticed that stock price recovered strongly today on increased volume. I think this was influenced a lot by the late afternoon news that the US Gov't will create an entity to consolidate bad debt; but I'm glad HSTX participated in this broad market recovery. NOTES from conference call... Overall, the microwave market is expected to grow 6%/year while the IP microwave market segment is expected to grow 20%/year. 31% of HSTX products sold were in the IP segment during the 2008 fiscal year; this is expected to increase to 50% during the 2009 fiscal year. Q1 FY09: $185-195 million anticipated revenue Q&A === 1. Nathan Johnson. Increased revenue guidance due to increased visibility. 2. Blaine Carroll. Congrats. New IP-based product which is universal (not ETSI vs ANSI). Only 9 days left in Q1... revenue targets depend on usual uncertainties. 3. Solid orders have been coming in so far this quarter. 4. Change to commission structure has been presented and will be in place by the end of September. Good feedback and has been accepted by sales staff. 5. Order in excess of $60 million will be delivered over the course of the nest few quarters; this is non-IP. 6. Rich Valera. Op Ex to return to average which includes a quarter with unusually high Op Ex. Shift towards IP will help improve gross margins but will initially involve some investments to transition the company to an IP mindset; this will take 6-12 months, so gross margins will not improve greatly before the second half of the fiscal year. 7. Jim Morrin. High transport costs still affecting gross margins; shift of warehousing to help reduce these costs; result to be seen in next few quarters. Mobile operators are building their own networks using microwave.

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