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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: Galirayo who wrote (19852)	8/4/2000 4:13:35 PM
From: Michael F. Donadio	Read Replies (2) \| Respond to of 21342

An important post by Capt Smartjack on the Yahoo/WSTL board: <<SBC is NOT slowing installs>> by: capt_smartjack (41/M/Naperville, IL) 8/4/00 1:53 pm messages.yahoo.com Msg: 19176 of 19200 Take a look at this message I posted BEFORE the last earnings call. It is message #15635, but the link is here too. messages.yahoo.com 635 This message said that SBC is INSTALLING 3500 modems a day, but ORDERING more than that. It states 3500 a day was the most they could put in, but they were ordering based on demand. Well, what happens when you order more product than you are installing??? It's simple, your warehouses begin to fill up with them. Once they are filled, it does not make sense to keep ordering MORE than you are installing. Therefore, the ordering will slow down some, until they can increase the install rate to meet the demand. This does not mean they will stop ordering the modems. It means they will slow down to only ordering about 3500 a day to fill the installation rate. SBC will NOT want to empty the warehouses, because they like the surplus for when they can increase the install rate. But, 3500 a day is still good volume. AND, there will still be increased ordering from GTE, Bell Atlantic, and BT. MZ and Co. KNEW THIS BEFORE LAST EARNINGS. He KNEW the warehouses were filling up, and orders from SBC (only) would decrease for a short period of time. This decrease would just be until SBC can get there install rate up faster. That is the uncertain part of the game here. WHEN SBC can get there install rate up much higher than the 3500 a day. They are working on that, and have told WSTL when it will happen, but WSTL has been burned before. So, WSTL has based revenue projections on them NOT getting the install rate up fast, and still revised upwards. If SBC DOES get the install rate up soon, then the quarter will be another blowout. As the install rate increases, the order rate will increase again also. THIS IS BUILT INTO THE MZ REVENUE PLAN!! MZ knew BEFORE the last earnings call that the warehouses were getting full, and orders would slow down for a small period. If this small slowdown was going to hurt the next quarter, do you think he would have revised estimates up?? NO!!! This is built into his plan, with room to spare. If SBC burns WSTL on the projection of when the install rate will increase, WSTL will still meet estimates. If SBC meets or exceeds that installation growth, then it will be another BLOWOUT quarter. I am looking for it to be somewhere in between, but will know better toward the end of the quarter. It's very nice to have this information from someone who has shown themselves to be well informed. All the best, Michael