Paul A:
Fore's exposure to Asia is not large. As per last conf call, if I
recall correctly 7% of the revenues came from Asia and that increased
from 4% but keep in mind it was from a smaller base. More importantly
they said that these revenues were fairly diversified-Singapore, China
and Korea were their main customers and all transactions were dollar denominated (which actually makes their products very expensive going forward.) Although this exposure is not large, my problem is at this stage every % of revenue counts because analysts are paying very close attention to their sequential growth (Q-Q). As per the call (they said
at least three times if I recall correctly) they were projecting 5-10% sequential growth from the last Q(109.7mm) and they also said 7% is more reasonable. Now even if they have 7% or for that matter 5% growth
it will be a record quarter at least for the top line. I have good confidence in this topline growth because of two reasons- it was said
almost at the end of Oct (which means they had already shipped for one month of this Q) and with pending lawsuits Tom (CFO) would be careful as to what he will say and even if he made a mistake I think he would not repeat it twice over a period of 45mins. Now as for the bottom line, I think whether they make 8c or 9c or 10c it all depends on the top-line number. As per my calculations, if they did 7% they should be able to meet 9c estimate assuming R&D and S&M came down a bit as a %ge of Revs (absolute $ amt will still be up from previous Q). I think, this company will be just fine over the long haul because they have been spending so much on S&M that something is definitely going to come out of it (I mean we are talking of leading edge technology and not selling some piece of junk!)
Also, I'm expecting these guys to make new product announcements at COMNET (I think that's what it is called) which will be in DC Jan 27-29. Two products to keep an eye on- high-density concentrators (result of Cadia acquistion and by the way for novices this product is not going to compete with Yurie's boxes!) called MSC-xx (it's about time!) and their next-generation switch (we are tired of ASX 1000) which will have 40GB capacity! (Cisco's switch will be half this capacity, so too little, too late!) I just wish this company had Cisco's clout and S&M guys!!
Regards,
Pam |
