Mark et all, just listened to the conference call,and here is my take on it.
Sales to Canada, Latin America and Asia are weak,very weak. It seems Canadien MSO's are saddled with debt,and not buying any telecom equipment. In Canada 4 out of the major 5 MSO's use HLIT's equipment almost exclusively,this is one of the weak spots.
The other major problem to me is CVUS, New Media had product ready to ship,but put it on hold. This not only increased inventory,but hurt revenues. I doubt CVUS will get back on their feet,they have sold half of their spectrum,and are a wounded animal looking for a place to lay down and die.
They received a payment in advance of shipment of product to China,sort of shocking in the cable business. They spent a lot of time and effort in China this past quarter,conducting major seminars in and around Bejing. Their 3 major Asian sales areas are China,Hong Kong(which we know about),and Taiwan. All three countries are fairly stable,and none have had the devaluations the rest of Asia has had. Lets hope that China does not devalue,though the pressure in on them. Taiwan is in some trouble due to their heavy reliance in semi-conductor manufacture.
Lets get to the meat to me of the issue,TCI. TCI did not receive any shipment of DWDM until the end of the quarter,most of the sales to TCI was for traditional products. A majority of these were for return path transmitters for 2-way associated with getting ATHM up to speed.
They have shipped 5 DWDM systems as of right now,2 in Lousiana,2 in Washington State,and 1 in Texas(Dallas). Dallas is their latest TCI build out and has 40 hubs,and 1 headend. Dallas looks like a key installation for DWDM and the first really major city being built out. How Dallas goes,is how the whole DWDM will go for HLIT and TCI.
They are the only company in the world in full production of MetroDWDM and can ship at a moments notice.
On the digital front,they shipped digital headend gear to someone named PTT in Asia(have to look them up).
New Media is in many trials around the world,though few of these have been turned into sales,except for Antenna Hungary,and Tele-2 in Sweden.
There were no 20% customers,though a few around 5-10%. Asia accounted for less than 20%,and did the America's. US sales for the first time in my recollection accounted for over 60% of sales.
The UK,US and China look strong to me,Latin America,Canada,and the rest of Asia look weak. It looks like they are concentrating on closing deals in the US,and shipping products to TCI,which has ramped up dramatically in the last few weeks,and in Europe.
They did sponsor seminars in Moscow of all places,though I think it will be sometime before they get it together,speaking in decades,not years.
It looks like CVUS really hurt the sales of New Media,and they were counting on it as they have a 30 million dollar contract with them. It also looks like Canada hurt pretty badly,and was unanticipated.
China is really looking good,as is sales to Europe,and also TCI and COX.
Over a dozen DWDM systems are in trials with 4 MSO's in the US,hopefully these deals can be closed.
The scalable optical node should not contribute,and has not contributed to sales in anyway yet. And when it does,it might no contribute to earnings for some time.These are very difficult to build,and they have to work out the kinks.
Any questions?
Tim |
