Mark,
I listened in on the CC today. Before I give you my notes / bullet comments I would like to say that I still think this is a great small company. If you look at the balance sheet, you will find IMO some amazing figures over last year and especially if you consider the bad year INVX and the other dd companies are currently experiencing. Some examples are an increase in stockholder's equity (up $10m), decrease in short and long term debt (down about $3 m, about 30% decrease), and their current ration is now over 12:1 (from around 8:1).
It is a shame that that they are in a bad down cycle, that an increase in HIF produces a decrease in # of wires sold, and currently only have one major customer for HIF (that should change once FSA gets ramped up later this CY. After listening to this cc, it appears that the next one possible two qtrs will be rough unless something changes dramatically. The Dec qtr may change if the FSA is in production by or in December.
Anyway, here are my notes (I will use IMO of use parenthesis if it is my opinion). The notes are in order of the CC and I take no responsibility for something I may have heard incorrectly:
1. Turnaround in the dd industry is not yet upon us.
2. Next qtr INVX will similar results as this qtr.
3. Dec qtr we may see the turnaround.
4. They are cutting expenses which is helping their margins from evaporating.
5. Profitability similar or higher in the 4th qtr-compared to 3rd qtr.
5. Overall volume greatly decreased in the dd industry.
6. Expect delivery of FSA in December. There is a demand for HIF/FSA.
7. Inomedica was sold. Net results are negligible.
8. FSA is showing excellent results. Customers want this-FSA. They will purchase suspensions from outside sources. No preferred source for the suspensions. It will depend on the customer and what their preferences are.
9. Plan for CY99-calendar, capable of 3 million per week for FSA. CAPEX will accelerate to $5-7m in CY99 (I may have heard this wrong). They expect to sell FSA in the 90 cents to $1.2 range. Will or possibly be dependant on competitors.
10. MR wires is 90% vs TSI 10%. Pricing has dropped in excess of 10% this qtr over previous qtrs. Run rate was 5.5 million per week.
11. Revenues for the qtr- LPC about 22%, PP about 78%.
12. LPC remains profitable, overall margins were pulled down about 5% this qtr. I beleive they said that LPC-HIF is running at 20% capacity.
13. Flip chips- no significant volume until mid CY99. Quals are currently going good. They expect significant margins (This sounded very good).
14. Depreciation & Amortization was $1.6m for the qtr.
15. FSA-INVX extremely comfortable with the interest shown by the customers. Tremendous interest by customers. I think they said they expect the breakeven point for FSA would be 1/2 million per week. The breakeven point for HIF was quoted around 2-300,000 per week.
16. GMR-no negative impact for INVX as heads will still need to be connected.
17. I wrote down 20 million concerning flip chips but I can't recall exactly what that figure was for (?). Once flip chip technology kicks in, INVX stated the growth rate in the industry could be 40-50% per year. There is much more revenue in the flip chip arena that the dd industry.
18. INVX lost some market share due to competitors in the flex interconnect business.
19. Stock buyback will be on the agenda at Friday's board meeting. Don't count on a buyback.
20. There is a demo for echosearch-Smart Solutions this Thursday (Unfortunately like an idiot I failed to ask other questions in re: to revenues, who was involved in the demo, etc).
21. Haley said the definitely did not lose any prospective customers due to their switch or possible transition from straight HIF to FSA (I found this interesting that Haley seemed very adament about not loosing any possible customers. IMO this was very postive just by what he said and the tone of his voice).
22. The 1st and 2nd tier companies are still the same.
23. FSA is currently being designed into new disk drives (This could be very positive for CY99). Smaller companies / customers should be using FSA in mid CY99.
24. No comment on takeover.
25. No effect on the rumored lawsuit (I believe it was in reference to the ex-HTCH engineers).
26. Equipment will be delivered shortly (I had no idea what equipment they were talking about-FSA or flip chips). It could be for FSA and bonding to the suspensions since they were later talking about equipment for FSA would be available in September and prototypes in AUG.
27. SEG is the only high volume customer for HIF. I believe they said smaller companies were either testing or also buying HIF.
28. Their current lasers have already been depreciated over the last 1.5 years and will only be depreciate over the next .5 year.
29. I BELIEVE they said that R&D will increase on an absolute basis next year.
30. Expenses can be increased in their divisions due to the sale of Inomedica without decreasing margins.
31. Buying vs selling by indsiders of INVX was on the side of sellers this qtr (I beleive in May).
32. INVX is scheduled to travel to Asia in about a month to talk to customers (they did not elaborate).
33. Improvement will most likely not come until December qtr.
34. They still beleive they will dominate the market with FSA/HIF.
Hope I didn't bore you. My notes started getting sloppy near the end due to my short attention span (I must be getting old).
take care,
Kurt
PS I didn't spell check or check my grammar:)
|
