Van,
Because you own FSCX, I thought I'd take a second, more careful, look. Here's my take.
This is a loser. No, not as bad as Nuko. Fastcomm has real products and revenue, and they are trying as best they can. Madsen is a good marketeer who actually thinks this will fly - but my senses (and research) tell me otherwise.
First, let's look at the market. The frame relay market is teeming with small firms just dying to get a piece of CSCO's customer prem turf. CSCO is protecting its position by adding frad capabilities and cost efficiencies to its routers. Also, CSCO is set to introduce its new 3810 access device in February, which, I understand, has a considerable backlog. According to the most credible market studies I've seen, FSCX is not in the top ten vendors offering frame relay access, trailing the likes of CSCO, NT, MOT, ANET, SYNX, CS and several others. Also, while frame relay is still growing rapidly worldwide, the U.S. market is showing signs of slower growth. In short, it looks like FSCX may have missed the majority of their opportunity in this market.
As for the products, it is clear FSCX doesn't know what it wants to be when it grows up. Voice FRADs, data FRADS, DSUs, data compressors, T1 ATM access devices, frame relay switches, web routers, async data switches, test equipment. That's 9 product lines for about $2 million per quarter (or about $200k per product line). They have products in so many areas, they look like a Black Box catalog. I have studied each product and find little competitive differentiation - none of the products kicks butt. And network management features seem to be an afterthought. FSCX leads none of the markets they address - there seem to be at least one or two vendors with better products in every segment they target. With all these different products for sale, FSCX looks more like a hobby shop for bored engineers than a motivated growth company.
I have spoken to two of their customers. Both indicated that some of the features advertised do not yet exist. This is not unusual in this marketplace. But it's predictable with FSCX, given how thin their limited resources are being stretched to accomplish the claims in their press releases. Madsen has initiated some promising agreements, but without concrete volume commitments, what are they worth? Answer: another product listed in the partner's approved product list. Don't get me wrong, GTE is a good partner and the relationship is important. GTE sells about 900 frame relay interfaces per month, but more than 70% of the connections are routers instead of frads. FSCX products can be expected to be installed in less than half the frad connected sites, due to other prem based competition. The maximum value of this deal in the most optimistic view would be $4-5 million/year. They need another 4 deals like this to generate any real excitement.
And I don't know what this "best sales force in the industry" stuff is all about. Trust me, they don't have it.
It appears that some optimists here look at FSCX and see the next COMS or ASND. A more appropriate likeness would be GANDF or NTRX. IMO, this is a $2.00 stock if they stay listed, $1.00 if Nasdaq bounces them.
Good luck with whatever you decide.
Bill |
