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Technology Stocks : Stratex Networks, Inc. (STXN) -- Ignore unavailable to you. Want to Upgrade?

To: Bernard Levy who wrote (1164)	10/19/2000 11:51:51 PM
From: Rob Preuss	Read Replies (1) \| Respond to of 1762

DMC Stratex Networks Q2 FY01 Conference Call - Part II, Operational Summary Tuesday 17 October 2000 Sam Smookler, President & CEO Order profile was spread nicely across the geographic landscape. Americas continue to be strong as is Europe, Africa, and the Middle East... our China business is robust and Asia in general has perked up significantly with a combination of new networks and expansion networks rolling out as well. Altium especially continued at a healthy pace with orders of $33.5 million for Q2 FY01 and $74.2 million for Q1 & Q2 combined. This puts us way ahead of our plan for the year and positions us to exceed $100 million in Altium revenue in its second year in the market. During Q2 we continued our penetration of the emerging fixed wireless access market in Europe by winning new contracts from operators in Ireland, Germany, Spain, Austria, and the U.K. We’re now seeing a trend for Altium in broadband fixed wireless access applications for high-speed ATM transport, for mixed voice and IT as the preferable choice. Altium with its leading edge spectral efficiency, full range of frequencies from 6 GHz to 38 GHz, and fiber compatibility is still the product of choice and the one to beat. On the operational side, our hard work in managing growth is paying off. During Q2 we shipped more than 12,000 radios which is an all-time high for the company as we approach the 50,000 radio annual run-rate. Altium in particular had a strong shipping quarter and the 38 GHz product is now in full scale production. Altium backlog is strong for Q3 and, as Carl indicated, we’ve added floor space and test equipment to increase Altium capacity and we’ve ramped up a new off-shore high-volume supplier for our signal processng circuit assemblies and indoor units. I’m pretty enthusiastic in sharing with you that, during Q2, our operations teams broke the back of the supply chain issues that had been challenging us. Through the combination of adding additional experienced supply chain managers across the company, taking additional capacity at existing suppliers, systematically managing supplier expectations throughout the quarter, adding new suppliers where needed, and as necessary finding alternative components to work around shortages... we’ve restabilized the supply chain process here at DMC Stratex Networks. I’d like to take this opportunity to say that many of our chief suppliers were very responsive as we worked through these issues together. I want to publically express our sincere thanks and appreciation for a job well done. As Carl mentioned, shipments of our popular XP4 product were up dramatically, marking a real breakthough in production output. The process capacity improvements achieved on XP4 will continue in this quarter as well. As new designs continue through the stabilization process in production, we’ll be increasing first-pass yields and we set an objective for another significant increase in output for this quarter. Our millenium development is still on track. The 311 Mbps product will be rolling out at the end of FY01 and the OC-12 (622 Mbps) product will follow 1-2 quarters later with other new products following those. We believe that the timing and the new technologies supporting these products will, just like Altium, match the real needs of the market. We’re already working with major customers on the roll-out of these next-generation products. In looking at the mobile market, the mobile build-out continues to be strong and growing as we continue to support all mobile infrastructure technologies. Mobile data is now driving additional base-station capacity deployment in addition to the continuation of voice-based mobile around the world. Looking ahead, we’re working with customers on next generation cellular (aka 3G or UMTS) and initial network specs show great opportunity for our broadband products. Timing looks like 9-12 months out and will produce another wave of growth opportunity for us. Our management teams and leadership that we put in place across the company have now taken root. All are on a course of continuous improvement in the way in which we manage our lines of business. We’re continuing to demonstrate improved productivity across the company. One metric we use is annual sales revenue per employee... which for us was $385K per person in Q2 FY01... up about 15% from the same period last year and which puts us in the top 10% of leading telecom companies in terms of this metric. The balance sheet management continues as an important focus going forward and, with our supplier situation now under control and our shipping linearity improving, we’re planning for inventory turns of 4.0 and heading for 4.5 in the next 6-9 months. Receivables are also moving in the right direction and should continue to improve. These operational improvements as well as factory-yield improvements and product mix change over the next few quarters gives us confidence about strengthening our gross margins and moving toward our opreating model of mid-to-high 30’s. We have specific action plans in place to make this happen. All-in-all the fundamentals of our business continue to be stronger than ever, the market is vibrant, our product portfolio is strong, and the great team people here at DMC Stratex Networks are prepared to execute on the opportunity. We look forward to the challenge and excitement of the future. I’d now like to turn the call over to Chuck Kissner, Chairman of the Board of Directors, for some additional comments on the company’s performance and our plans going forward. [That’s about 29.5 minutes into the 1 hour 15 minute call. Chuck speaks for about 12 minutes before opening up the call to Q&A.]