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Technology Stocks : Finisar - FNSR -- Ignore unavailable to you. Want to Upgrade?

To: Jack Hartmann who wrote (103)	6/3/2000 1:37:00 AM
From: KevRupert	Read Replies (2) \| Respond to of 509

Conference Call Notes: 1. Business Overview There is a general shift to optics. 2. Financial Review EMC and Newbridge Networks are the only two customers which have over a 10% revenue relationship with fnsr. EMC has gone from 23% last quarter to 29% this quarter. Newbridge was flat in revenue. Brocade is moving fast up the revenue chain. For the 1st quarter, gross margins are anticipated to decrease slightly. In the 2nd & 3rd quarters, the gross margins are anticipated to increase due to moving production offshore. This offshore movement was highlighted 2-3 times during the call. The company's strategy has been to build up products for the customers, to prevent any shortages for customers. 3. Summary a) It was an amazing and exciting year. b) There were 165 new customers in the past year. The company won some big company bakeoffs, that required showing superior product lines. c) Customers include HWP, Sun, Foundry, Emulex, Newbridge, Lucent, Extreme, and Brocade. d) Technical progress has been made on many prototypes. e) The issue of 12 straight years of profitability was highlighted a number of times during the call. f) The company is in a strong financial position due to the IPO and secondary offerings. The money allows capital for product development, or other strategic opportunities that may develop. g) R&D has been expanded by 50%. There are now 80 employees in the R&D unit. h) Cost reduction plans (oversees production) should allow for higher margins. i) The future is bright! 4. Question & Answer Session a) New product lines are being developed. General Instruments (Motorola now) is ordering products for the cable TV product line. b) Optical subsystems is accelerating. There are new customer wins, along with a high growth rate. c) Customers are asking & planning for next generation product lines (2 to 10 - which will be in development). d) Extreme and Foundry were moving up the revenue ladder quickly. e) There wasn't a significant shift in pricing trends. Electronics always has a decreasing-price product model, but nothing significant for the company. f) The issue of cable TV patent issues is a non-issue. This issue has been researched and addressed by fnsr's patent attorneys. fnsr has a unique situation with their proprietary situation. The competition overstated their claim to having patent protection, as that company admitted they did not have any patents (to fnsr's patent attorneys at a later date than the competitor's announcement). My initial thoughts: Positive call. Sounds like an excellent customer mix, and a strong growth rate going forward. I am a little concerned about EMC having a 29% share of revenues, but EMC is an excellent customer to have.