From the Tellabs thread - here are comments from Dave Dickerson on the recent Tellabs Conference Call:
From: Dave Dickerson Saturday, Jul 18 1998 9:22AM ET
Reply # of 2755
To the new comer Tony Johns and to all-
To all-here is my summary of teleconference 7/16/98 that followed the 2nd ¬ results.
My first assumption is that you read the standard press releases on the subject, so that what I want to bring you is the flavor and background of this event.
First some background, in my reply 2559 on this string I summarized my views on Tellab's-Ciena merger Message 4777306
Also you need to read "Fiber keeps its promise" by George Gilder 4/7/97 in Forbes found at forbes.com
, if you are to understand optical networking solutions in the information age, Tellab's next big push with the merger.
Another piece that I'd refer you to is my reply 1340 on this string 10/7/97 techstocks.com
The main thing coming from the conference are the decisions of a sharp, well-experienced management team..When you beat 25 analyst's estimates of net earnings of .$.42/share by 9.5% and get $.46/share , then you can expect the $11 jump in share price, that we received over one week ago, plus a flurry of good press and upgrades eg."Tellab's blows away estimates", publicity that you can't buy.
Mgt. wrote off Steinbrecher wireless to tune of 24 million and redirected efforts to optical networking. This was due to poor markets, local loop problems , deficiencies in Tellab's approaches.. No body was fired, but a losing deal was cut out.
Next they timely sold 2.1 million (m) shares of AFCI for an average price of $35.18 ( the price went from $40 to $20/s)for a net profit of $73m..They still hold 3 m. shares and 600,000 warrents. Now when you exclude these two events, sales this ¬ were up +32%, and net was up +46% ( the trade usually only forecasts +30%) vs. one year ago. For this very busy ¬, Titan sales were up 51%, Martis was up 21%,echo was down 23%( largely due to lumpy sales),cable was 3m.(expected to be 20m.for 2nd 1/2) with 71%sales in USA with net profit at 32% of sales ( up from 29.9%) Looking at Titan sales , 35%was new business and 65% was upgrades. They have a strong balance sheet with $578 m. in cash and investments. R&D was the normal, 12.4% of gross, the "best investment that Tellab's makes" bringing forth new products in optical,ATM,cable Titan,etc. They opened a new 150,000 ft sq facility in Finland with 2/3 mfg. and 1/3 development, and the Ireland facility to open this ¬. Stock equity at $5.87/share with 182,529,304 shares, outstanding.
They have a strong backlog of orders and the rest of '98 " looks great" with good customer demand and their estimate of $1.87 net per share for 1998 ($.10 over analysts),this is for Tellab's only. Whats causing this demand for their products, you ask?
Go to Geo. Gilder's statement that the total bandwidth devoted to communications systems world wide, in this information age, will TRIPLE every year for the next 25 years.
As of 7/6/98 100 analysts put Tellab's first in hidden value of the tele equipment mfg. Cos.
As of 1/30/98 Tellab's had the best 5 year annualized return in stock value of 91.3% of any of the S&P 500 stocks.
Tellab's strives to be a leader in areas of business that it chooses to compete, with neat solutions. interoperability, and new technology. The World Communicates via Tellab's.
Next remember that Tellab's new goal is not to be 1 billion gross by 2000, but to be one of the top 3 players in this business, with a gross of $ 6-8 billion by the year 2004.Last year they grossed $1.2 billion.
That's about all this aggie can type, for now, more later.
DAVE DICKERSON |
