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

To: Johnny Canuck who wrote (34848)	10/21/2001 9:59:28 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 67993

TXC Earnings CC, Oct 17,2001: Q3 rev and EPS in line with mid Q update Q3 design wins greater than June Q. 45 customers using 28 products. Increase in value of wins 70 percent Y-Y. Diverse geography of wins. Key element of all wins for the year still in place. Expect to reach volume production in majority of wins. Short term business is still unclear. Inventory at distributors down modestly. starting to see some new orders, but uneven, no confidence in trend Q4 rev will be flat. Will be into 2002 before inventories reduced Mid 2002 before up tick in orders Expect metro and acess to recover first. In Europe it will be metro, access and core. Strenghts of TXCC: - not dependent on any one customers - lots of design wins - diverse product mix Conditions are worst TXCC has seen. Financials: Rev 4.5 mil down from 11.5 mil last Q, 42.6 mil last year [Harry: Wow, gives you an idea of how overstocked the channels were!] Mostly SONET products. [Harry: Interesting, goes with trend most telecom equipment makers are saying of carriers added to existing legacy services only for most part.] N. Amer 27 percent of rev Intl 73 percent of rev Two customers made up 1/2 of rev: LU and Samsung this Q. [Harry" Still a lot of concentration. It appear to change Q to Q though.] 3.7 mil in gross profit vers 4.7 mil last Q, 13.1 mil year ago GM 74 percent Improvement due mainly to mix. SONET has higher margins. R+D 11.7 mil down from Q2 S+M 4.7 mil down from 6.1 mil last Q G+A 2 mil down from 2.3 mil last Q loss of 15.1 mil pro-forma excludes 10.7 mil gain from buy back bonds, 22 mil charge foo ONIX acq. 1.9 mil in layoff charges and 600,000 in good will write offs tax rate 35 percent cash 462 mil AR 3.1 mil down from 5.4 mil DSO 55 days in line with long term targets, up from 44 day last Q [Harry: How can that be considering AR is down Q-Q????] Inventories up to 20.7 mil from 14.6 last Q due to receiving shipments of ordered parts. [Harry: It looks like they could not or did not want to cancel. How confident are they of selling it???] bought back 146 mil in bonds BTB < 1.0 Q4 Guidance: Rev flat GM low 60 percent [Harry: Mix miss be worst going forward given flat rev guidance] OP Ex 3.5 to 5.0 mill R+D 3 to 4 mil S+M down 200,000 G+A up 300,000 to 500,000 due to ONIX acq. EPS loss of 19.5 to 20 mil Interest exp 400,000 to 600,000 on bonds EPS loss 11 to 13 cents Tax 35 percent Q: Inventories are up. Anymore write offs? A: Comfortable with current levels. Q: Head count. A: Mod 400's. Will do more layoff if necessary due to market forces. Q: SONET? A: Some asynch and ATM. Not significant to break out separately. Q: GM. Q-Q volatile. Why? A: Due to mix at current rev levels. Minor changes have a big effect at current rev levels. SONET higher GM. Low visibility to Q4, so being conservative with low 60's GM guidance. Q: Mix more important than vol? A: At current rev levels yes. Q: Change in order patterns? A: Sudden orders at end of Q3. Not predictable. Q: Depends on the user. A: Yes, in conversation with customers some are running out of parts. Q: Bottom of down turn this Q? A: At bottom of trough. Up tick not till middle of next year. Q: Asia weakness. Bright spots? Europe? A: China still bright spot. No change from before. KOrea not good, but seeing some signs of life. Samsung agreement indication of this. Europe seeing weakness. No idea of re-bound timing. Seeing some announcements of broadband spending flat with this year though. Have design wins in sector, so some areas of strength expected. No idea if N. Amer will re-bound before or with Europe. Q: What part of rev new products? A: Mostly legacy. 80 percent legacy, 20 percent new Q: Op Ex of 2002? Tax Rate 2002? A: NO guidane. Tax Rate mid 30's Q: 28 different products in 45 customer accounts, percent be product? A: call later Q: Inventories? Any more outstanding orders? A: Minimial. No uptick this Q. Q: Design wins. Type of product? Platform? A: Mostly acccess. Wins in metro, not sampled yet. MNIX interest high. Expect good ONIX news in next 2 Q's. Q: What are customers saying? A: No slowdown in new product programs. Even cash strapped companies investing in new products. Very little visibility with their customers. Expect more even order flow next year. Q: Distributors? Percent rev? Inventories? A: Very modest. Q2 to Q3 decline of inventory in channel. Declined 13 to 14 percent. Q: Rev recog. policy? A: Booked when shipped to distributor. Working with dist. to make sure no more inventory than required. Q: Turns? Customer feedback? A: Turns business modelled is based on customers saying they are running out of product. In last 30 to 45 days have seen some last minute orders as they run out of parts. Q: Are all wins still in place? Any risk? A: Nt has left the access business, so some programs are gone. Expect most to go through to production though. Q: ONIX products? A: First one taped out. 2 nd one in verification. 2 nd one taped out in Dec. Q: End of Q saw significant up tick in turns business? A: Not true. Saw placement of some orders. Q: End user consumption vers shipments? A: HArd to know. Guess: End user demand higher than Q3 rev, modest though Q: EMS customers, dist. , OEM's inventory levels compared to run rate of TXCC A: End demand 2 to 3 times Q3 rev Q: EMS customers? A: Do not know yet. Q: Post 2002, percent of wins that will turn into production? A:Lsst 3 to 4 years 70 percent made it to production. See same going forward. Even financially strapped companies doing new designs. Most design wins for year intact. Only some like LU/Chromatis and TLAB/Salix. Those products are gone. Q: Rev Q4 flat. Turns level? A: 2/3 of rev back orders. 30 percent turns. Historical 20 to 30 percent turns before down turn. Turns in Q3 small based on historical levels. Q: Europe/Asia strenght. Product mix? A: DSLAM and multiservices. Most of products staying in the region. No sales back to N. Amer. Q: Convertible bonds? A: 62 mil bought backin Q. 146 mil bought back to date. Will continue to buy back more. Q: Cash flow in Q. Burn rate? A: moid 20 mil. Q: Stock byback? A: 1 mil bought backin low 4's. Up to 10 percent of outstanding authorized.