Anyone listen to the conference call?
I did.
Mainly, they expressed great optimism in the ADSL marketplace and Orckit's competitive position. Apparently the two large wins -- DT and GTE -- use forward pricing models. I interpreted this to mean that the price per line is constant over some period of time, which won't become profitable until volumes create sufficient economies of scale, and more importantly, when the new chipset reduces costs.
Whereas I think top line growth will continue at this latest exciting pace, bottom line profitability awaits Q1 1999; that is, I wouldn't expect any profits until reports six months from now, if then.
All this is presented as on plan; in fact, they had said that capital they had alrerady procured was only needed to ramp up for these types of volumes.
There are additional customers of three types -- HDSL, smaller ADSL where margins are much better, and other larger customers who have not published names or expected volumes.
ADSL now ships 5,000 lines per month; Q3 revenue was over $7m for ADSL.
They expect ADSL and cable modems to split the US market 60-40, maybe 70-30, and hope that ADSL gets the larger share. In any case, there will ultimately be a very large pie to share.
Anyone else listen in? I didn't take notes, so I'd like to hear other takes. |
