Q&A
Al Topia - NationsBanc
Avidia trials with whom?
Mostly independents and CLECs. RBOCs looking. But focus on independents since they
are ready and represent immediate revenue stream.
IXCs?
Included in independent grouping (MCI, Sprint, and most larger indies).
Moderate to large volume purchase by CLECs will skew revenue projections.
SBC?
ADTN selling plugs; HiGain98 approved; HDSL2 and Avidia penetrating.
No award per se.
Pat Hooten (?) - with (?)
Avidia revenue potential for 2000?
$20M in 99 (doable per McBrayer); est. $40M in 2000.
HiGain chip technology - leverage position? as vendor?
Deploy through systems only.
Nikos - Warburg...
Royalty and technology transfer fee higher, how?
Rockwell represented $4.1M. Running out up front fees in contract.
Gross margin?
42% - somewhat flat.
What to expect of GM going forward?
Continue low 40s in 2Q99; mid 40s 2H99.
How will margins go up?
Slowing price erosion. HDSL2 provides higher margin. Small subscriber very strong.
What is driving HDSL2 deployment?
Feedback great. Continuous high demand.
Andrew Schopeck (?) - Nutmeg Securities (?)
How to improve business operating efficiency?
Efficiency there. Need to be more aggressive.
Alliances for DSL development?
Avidia already there. HDSL, 2, IDSL, looking at VDSL.
Will look at partnerships as they and need arise. History of partnership. Core DSL already.
VDSL only one not really explored in depth.
Michael Nieberg - ING Furman Selz
Pricing erosion?
Expected higher, but surprised with lower rate in 1Q99.
Expect 2Q to be higher to account for reduced 1Q99 rate.
3Q will stabilize and realize 15% year-to-year reduction built into internal model.
HDSL growth still 30% or more.
What RFP/RFQ changes?
Increase requests Q to Q.
"DSL is hot" Pascoe.
Ken Savageaux - Volpe
Outlook for 2Q99?
Modest growth. Mostly through small subscriber line with small amount from HDSL.
SBC?
Avidia and PG Family in discussion. Avidia not in trial.
Increase in HiGain sales. Expect more. Volume stable, but % decrease due to SBC rampup.
Paul Johnson - BancBoston
What pieces still missing? Anda to fill gap?
Anda next step towards next generation equipment and to provide complete solution to carrier.
Voice over DSL?
PAIR looking closely.
Avidia, Anda, PG Family - 2H99 good?
Bullish on 2H99 and 2000.
Stephan Levy - Lehman
BA HDSL lost by March?
BA, booming with PG. HDSL still shipping. Decreasing, near lowpoint.
Royalties? Per unit from CNXT?
Coming in 2H or 2000. Under $1M/Q.
VJ - SG Cowen
Tax @ 34%?
Same or slightly lower.
Inventory down to 4.5, goal?
Comfortable with 4.5 - 5.0.
G.Lite taking off?
Carriers discussing ADSL, but will be pre-G.Lite.
PCs looking at incorporating G.Lite chip.
George Schneider - Dain
PG competition?
Essentially none. Very dominant position and growing.
Pricing pressure?
No change.
New customers?
Moving forward. New ones to be added this Q.
Frank McVoy - Piper
Technical mumbo jumbo on Avidia...
Avidia momentum? Added in 1Q?
Less than 15 in trial. Customers visits growing with great response.
Customer wins?
Won't disclose at this time.
Mike Ferrin - View Investment Group (?)
2Q flat? Double EPS in 2H?
Good confidence.
HDSL business increase - unit volume down, flat?
Market growth still 30% - comfortable.
Mark XXX - XXX
PG growth continue?
Yes.
Charles Pluckham - Soundview
CNXT relationship continuing?
Continue through March 2000. Will renew.
SBC?
SBC no longer primary (HDSL) - meaning no longer > 80%.
% of bottom line from SBC?
10%, will hope to maintain.
Level One relationship?
HDSL2 chipset co-development.
Paul Johnson - BancBoston
Operating expense up - new trend or one time?
Increase headcount, new higher level. From RD/sales/marketing staff.
Thanks from Pascoe. END.
My comment
No way am I selling. Will be buying more!!!
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