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Technology Stocks : FORE Inc.

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To: CJ who wrote (8171)	4/23/1998 10:07:00 PM
From: Ed Frye	Read Replies (4) of 12559

what i do 4/u.... 1Q for Tom Gill as Prez/CEO..... network of steel brand image campaign and product differentiation launched..... jan started slow.... feb momentum picked up mar accelerated aprl continuing record backlog and the best visibility in 2 years!!! sgignificant pipeline of .25 to 1.5 MM projects with high prob starting to win in new areas on the edge etc with major customers... asx4000 will open up numerous marquee accounts in globall 1000 companies... despite typical slow q - has distinguished itself from its competitors in transitioning to future... BTB>1 ..... visibility great! gross margin was brought down by low end ethernet layer2 switch new stackable products will help gm end of year asx4000 will help in carrier market r&d lower and will decline further until it approach 12/13% in future s&m expense = investment = 25-27% in future g&a =~5% for forseeable future met goal of at least 10% net margin (increased rev vol and lower r&d) goal = 15% net margin by Q4fy99 8MM cash positive effective tax rate declining (dublin ireland plant helping) expects etr = 30% w/o tax benefit eps = 12 cents product mix atm up 15% lan rev down but ethernet up ES4810 launched in mar and will be big contributor going forward intl = 33% europe grew 35% asia flat from last Q outlook in asia unclear short-term but long-term good 41,000 enterprise switch ports (reduction) @ $1600 transitioned to oc12 v oc3 --- fewer ports for higher prices and better margins) 6,000 isp ports (up 1000) but asp down a few hundred.. again more oc12 ports and rev increased 4% lan switching ports (ethernet) stackable 10100s??? atm desk top products also record and cuts into ethernet.... 622NIC card will have greater volume and asp 100 more employees DSO increased/decreased a couple of days depending on how its measured reflects backend loading AGAIN - expects DSO to decline next Q given faster current pace of sales..... Q&A SEGMENT nbms - carrier atm product development/contribution --- asx4000 will begin shipping in august timeframe - high end enterprise switch but suitable for many carriers and they have shown strong interest - that will evolve over next 6 months into a classic carrier class switch!!!! high end high margin switch..... june Q sequential growth expectations --- going into june Q in full swing - good opportunity to grow this quarter !!!!! revise future Qs to a 30% tax rate (positive)..... added 15 engineers other 85 in s&m asx4000 will debut at Interop - several now running in cafeteria - there will be other product and partnership announcements.... stackable10100 ethernet switch will be rolled out at better margins in next 90 to 180 days.... breakout by product line repeat.... 56% atm backbone 8% ??? 5% NIC card 21% lan 10% other juneQ linearity - seeing improvement now.... Gill talks very fast..... update on cadia product -- msc700 -- available calendar 99 - trying to move it up to match availability of carrier class version of asx4000 underestimated complexity of msc700 product......asnd's cascade/sahara product is similar also sentient and yuri have products in similar space.... was there a supply constrained in mid and high end switches? NO - sold record amounts and pushed the inventory limits at times ACCESS Graphics - high end 2-tiered distibuter owned by GE and sell lots of SUN and fits well with FORE's VARs (closed in mar Q - not going to generate a lot of new sales but will help FORE manage/leverage their VARs) DT is a systems integrator - will help sales and MAY buy FORE products for their own use..... rec modeling r&d spending at 12-13% lan switching has been in 28-30MM range last few Qs units and rev were seq down --- asp =$250-300/port --- part of total solution - could have shipped more this Q if they wanted to - sitting in backlog or shipping in april - business level for ethernet was much better than what was shipped....new stackable products and sales to new enterprise customers will drive ethernet switches... atm at the desktop also surged this Q and may have cut into ethernet.. FORE offers wide variety of edge solutions... enterprise has been 80-85% of their business atm 80/20 = enterprise/sp overall 85/15 service provider will probably increase faster - approaching 30% eventually - favorable impact on margins (higher end products) compliments of network of steel ad campaign budget for ads ads have been created - ongoing cost is placement - instincts will guide whether they increase/decrease..... netcore everest switch = ~asx4000 asx4000 has distributed approach to routing and switching and netcore product doesn't..... modeling atm sales growth of 10 to 15% winning more all-inclusive deals not yet announced petroleum industry (not shell) anoyher industry leader - all atm backbone and edge 18-24 month 2 airline industries won entire worldwide network will start to see more and bigger announcements -- 5 to 10 phased in implementation CSCO's next generation ATM switch - don't see that stalling the market 20 Gps w/o OC48 currently csco has 5 gps that competes against fore's 10 gps csco rec ethernet solution with upgrade path to gigE and/or atm when available.... sees GigE as a short distance solution and will offer interfaces on their atm switches.... any big wins with service providers... uunet... internetMCI... sprint/nortel.....magellan another class of emerging carriers = clecs and catv that will be announced soon - building out their infrastructure and some reselling....lots of selling in china when will this end???!!! interest seems greater than in the past - gill is doing a better job now that he is beyond scripted material - always stressing better things are coming or have already happened but haven't been announced yet.... share count will move up as share price increases ~.75MM est analyst slipped and stated "with the share price now going up.... THE END............

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