Three things must happen to really move this stock...(up)
1) Asian flu must end to revive developing countries expenditures on NN's high profit products.
2) They need to sell (and ship) some big numbers in 36170 to get some economies and momentum for the top line.
3) Some serious work needs to be done on that expense line now that TDM doesn't cover it and UB can't be the scapegoat.
I think you list legitimate concerns. From the conference call, I took the following notes:
50% sales are packet-based WAN.
36% are MainStreetXpress 36170, a 150% increase froms same Q '97, with 80 customers for Q and 250 overall, many are largest carriers in the world, and 90% are also TDM customers.
TDM down 32% sequentially.
TDM revenues will improve Q4.
LAN Packet/VIVID is 13% of Q revenues.
" " " had 50% sequential growth. (Gains all absorbed by UBNet losses.)
Employment --- 250 decline as part of restructuring.
$26.4M R&D associated with RADNET purchase (with Siemens).
$181 M restructuring charge associated with UBNet.
From Peter Charbonneau:
Actions in Q3:
Eliminate 450 positions.
Bringing operating costs to 36% of Revs.
Control expenses, capital expenditures.
Use inventory.
From Terry Matthews:
"This year is critical for success."
ATM access with RADNET purchase (with Siemens) adds MainStreetXpress 36140 and 36144 ATM access concentrators.
Doing broadband wireless in-house, shipping mid-year.
Cemented siemens and 3Coms relationships.
2000 in R&D between NN and Siemens.
COMS will be mutual reseller and some co-development.
One third of revenues come from Fortune 1000.
CSI gaining in corporate and carrier market.
VPN products at the leading edge.
We continue to win tenders.
36170 is key to ATM and CSI --- It's the best in the industry.
Core WAN is solid. Gaining additional business in core markets.
Q&A:
Hiring plans?
Only hire as people leave. No increase in operating expenses. Three Qs out we'll resume normal pace.
Comment on ATM, 36170 with MCI, BT, and RBOCs?
I can't comment on BT and MCI contracts. . . We're in good position with RBOCS. . . close to winning in several. In earlier phases of pilot network. Some revs in Q3, ramping in Q4.
TDM?
Flattening out globally. Data connectivity in Latin America and Asia still strong.
ATM in Europe?
Strong in unregulated markets. ATM with circuit emulation will move to make TDM more efficient. 36190 in labs now.
Competition?
Cisco is a strong company. Their weakness is in managing network when it gets large.
ASND?
Also strong. VPN and switched networks (have?) attributes of ATM.
Kinds of partners for CSI?
End users and associations of end users.
WAN packet growth?
Bulk of growth towards IP.
VPN?
We're pleased. Definitely one of foundations for ATM. The other side is connectivity: ADSL and broadband radio.
(That's when I fell asleep. :))
Pat |
