Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (32502)	5/29/2001 2:55:54 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70309

DITC CC Notes: Titanium , new optical product (Optemara Networks - optical sub for DITC) rev 19.7 mil down 58 yty, income 165,000 or 1 cent per share 30 mil shares out in Q rev 121 mil for year, up 4 percent yty EPS for year 91 cent down from 1.38 Fiscal 2000 Telecom equipment market challenging, large vol OC3 echo canceller OC3 or STM 1 (international version of OC3 echo cancellor) $17 mil versus $8 mil in optical subsystems Optemara Networks new Rev Q2 2002 down due to reduction of carrier Cap Ex, general outlook unceratain as no increasewhen Qwest cap ex removed 30 to 35 mil in OC3 orders Lowered estimated for first half 2002 Now guidance past Q2 Qwest non -echo product demand solid Building suite of products in sub-systems that will give traction 3 new customers in echo-cancellers minor problems with OC3 products being fixed single large order in Q to one customer to the end, result high DSO's target net 30 for payment of orders. STM1 test for this Q, ship for rev in Q2 expect STM1 density and performance to open international markets North America has seen higher density newer solutions. International has not seen this adoption of new equip. New STM1 has 28 time the capacity that older products in typical configuration in international networks Other Application for echo cancellors is wireless. Have not traditionally been strong, but getting better Have 3 of top 8 wireless carriers as customers. Customers: Verzion, Sprint/PCS an Voice Stream Advantage is energy efficient software solution. Optical business: big opportunity, still doubled rev despite down turn. Main product is optical Amps. Gained 3 new customers in Q. Introduced new Quasar technology last year which works on mulitiple wave lengths in D-WDM networks. Expect optical sub-system rev to increase 50 percent despite difficult times. Have good visibility in this segment. Very confident on this point. Titanium uses Quasar optical Amp subsystems. Optermara (spelling???? optical subsidary) announced in March.Titanium also announced at this time. Goal was to to combine Atmosphere Acquistion networking expertise with DITC broadband products to produce Titanium. Titanium necessary in core and long haul. Several weeks required to connect a fiber from coast to coast. Service velocity rate of hook up. Number of wavelengths supported in switches is an issue in order to ramp customers quickly. Currently switchng is 1000 of wavelength right now. Titanium will switch 16,000 wavelengths to light. Version one hardware can scale to 2 mill wavelengths. Limit is software in the switch. Expect release Q2 2002 from production version. Rack densities will be less than 1/10 of densities of competing products. State of art optical components allow density advanatges. (DITC products or external????). Target long haul networking market. Have 4 of top 5 carrier as voice customers. Working with 7 carriers. Virtual ring capablity in product. SONET relability over mesh network. One click provisioning. Double R&D staff to complete development. Announce Australian subsidary. Expect staff to grow to 15. Expect Titanium shipment in later half of 2002. Rev from Titanium will be nil though. Impact will be in 2003. Lowered guidance in first half of 2002 is due to uncertainties of market. Investing and extending lead in echo cancellor technology through down turn. Still see long haul as the engine of growth in future. Financials: Q4 2001 results: Rev 19.7 mil Gross Margin 66% EPS 1 cent Total Rev 19.7 mil down 48 percent from YtY Q Rev mix fairly balanced. Qwest 35 percent of rev. Last Q Qwest was 11 percent. Optical Rev 20 percent of rev. R&D up 46 percent QtQ, 212 percent YtY Titanium products resulted in increased spending. R&D higher than expected. Tax Rate 42.5 percent Profits due to increase rev, but off due to investments in R&D Shares Out 30,160,000 Cash - 110 mil down 11 mil due to larger receivable balance cash in deposits AR 17 mil up 8 mil due to shipment in second half of Q. more linear shipment pattern in future DSO 78 ver 68 last Q Q1 DSO's down, but above 45 day target inventory 16.6 mil , 16.3 mil last Q inventory levels still high historical due to late shipments in Q turns 1.75 up slightly from last Q Head count up, have 211 employees, up from 207 last Q, from 114 last year 2002 Guidance: Includes accelerated develop of STM1 and Titanium products. Revenues originally expected to improve 10 percent YtY. Will not occur with Qwest does not speed. Q1 and Q2 rev could be down 20 percent seq. Quad, broadband and OC3 will continue to be most of rev. Optical Product rev will increase to 22 mil in fiscal 02 Titanium rev impacted by test and compliance and long sales cycles. Optical sales mostly to OEM's. Small number of OEM's will impact rev. OEM channels contribute lower gross margins. Expect GM to be greater the 60 percent for the year. Sales and marketing will increase 4 to 6 percent seq each Q. R&D expenses will increase 4 to 6 percent seq in each Q in fiscal 2002 Input from 7 customers crafting Titanum designs. Cap Ex will increase due to major engineering development. Interest in cash expected to decrease from Q4 levels due to interest rate declines. Losses in Q1, Q2 and Q3 expected due to softness in customer spending and increase spent on R&D. Q4 will be profitable expected. No debt and 110 mil in cash. Question: Old expectations fro Qwest rev. Answer: Expected 80 mil originally. Still expect 40 mil in January pre-announcement. Now quite small Qwest contribution. Most of what Qwest took was OC3. No shipments to other customers. Question: Why Qwest taking any this Q if Question: Non-each down this Q. Answer: Flat Question: will wireless growth next Q? Answer: Low visibility. No comment. Question: Shipped to Verzion? Answer: 18 percent customer in Q4. Now 10 percent customer in Q3. Question: 10 percent customers Answer: Qwest and Version. 3 to 4 5 to 10 percent customers. Question: Answer: Growing in wireless side. Expect wireline and wireless 50/50 split by end of year. IP Echo cancellors 5 mil due to royalty on algorithm. Question: Answer 24 mil in Optical shipments. 50 percent growth on this years numbers. Question: Titanium rev ramp. Answer: Q1 2003 will ship actual products. Q1 2002 will ship betas. Question: SMT1 rev Answer: Q2 2002 will see rev. Will have compilances in place. Question: Estimated markets on Titanium in next 5 years? Answer: Basic market has segments of density W-DWM. portion of long haul market and switching. Expect 16 to 20 bill per year. 20 billion in 2002 possible. Product is unique as far as we can tell. No competitors we know of. Question: Qwest demand going forward? Answer: No comment. Too uncertain. Over next 10 years voice over packet and voice over traditional networks will continue to grow. Question: Product mix for echo side? Answer: OC3 and STM1 will probably represent 1/2 of echo rev. DS3 and Quad legacy products and licensing rev will make up other half. Question: Q1 will be 25 percent down seq. Q2 down 25 percent down again. Answer: Q1 will be 25 percent then flat. Question: Q1 and Q2 Qwest contribtion? Answer: Qwest will be barely 10 percent customers. ************************* Overall impressions: This is no reason to own this stock till Fiscal 2003. The next two Q's are going to very ugly. Surprising they see strength in international market, but indications are international economies are slowing as per the US economy's lead. New products will help, but product ramps will effect EPS and margins. Titanium product is interesting, but the long haul to dead right now. It may be the future, but not the near future.