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

To: Johnny Canuck who wrote (34866)	10/24/2001 4:10:23 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68330

LMNE CC: Difficult time in optic area. rev levels reflect continued cap ex spending slow down. High levels of inventories and excess capacity. Expect Rev Q4 17 to 19 mil. Have visibility when most don't Cash up slightly to 19 mil Focus metro and acess, less severe than rest of telecom market, but high inventories at customers present Seeing some new orders but at lower ASP's. Seeing some new orders. Next break through in higher integration of active and passive components Commodities fiber optic transceivers MRVC has ASCII development and experience in high integration. MRVC can not raise additional capital in current market MRVC rev on upswing but rest of MRVC start ups are not cash flow positive LMNE 12 mil shares in float MRVC currently on an upswing trend Financials: Charges 3.1 mil Rev 18.8 mil down 48Y-Y, 54 Q-Q Technical problem prevent booking of some rev, shows as deferred in statement, so 21 mil range pre-announced not met one 10 percent customer MONI, 11 percent last Q MONI at 13 percent, also only 10 percent customer. US 44 percent, Intl 56 percent Asia 37 percent Europe 19 percent Q2 US 57 percent, Intl 43 percent EPS loss 1 cent, 2 cent last Q GM 26.1 percent 0.52 percent less Y-Y, 0.6 less percent Q-Q Lower volumes and price pressure in Asia most of effect, offset by cost cutting head count 1070, down 420 Op Ex 7.2 mil down 2 mil Q-Q, 22 percent down Exp 35.8 per of rev, vers 24 percent Q-Q OM minus 12.4 percent cash 93.7 mil , up .6 mil Positive cash flow 5 mil in Q Cap Ex down to 3 mil from 12 mil last Q Paided down debt in Q 3 mil DSO 90 day up from 50 day Q-Q, due to delayed payment and lower sales, without delay 68 days, 2.4 mil payment delayed Intl Sales and technical problem caused increase DSO expect DSO to decrease going forward Inventory 24.3 mil down 5 mil Q-Q Additional charge 3.1 mil for lay offs: 1.7 mil for layoffs, 2.4 other Guidance Metro and access focus, customer diversity will allow us to gain share in future, but cautious short term Focus on cash and break even, Will continue to invest in R+D Q4 only 17 to 19 mil EPS loss of 2 cent to break even Q: Depr for Q3? A: 20.85 mil Q: Inventory levels at customers? Transceivers? Passives? A: Do not know. Inventories still high and rate of use still quite low. Q: MRVC joint product developments? A: Broad range. Fiber to home products emphasis as this requires integration Q: Technical problem with shipment? A: R+A problem. Will have to replace product. Will re-capture rev in a few Q's. Q: GM with missed shipments? 500 point drop. A: Hard to say Q: GM due to price pressure and lower shipments? A: Hard to answer, last Q price pressure in Asia caught us by surprise, even though Asia percent revs up, ASP's down so absolute rev down. Q: 4 mil in deferred rev? techncial issue? A: No all in Sept Q. Will work through in a few Q's. Q: Impact of 4 mil deferred caused miss in revised rev guidance? A: 2 to 3 mil. 1/2 next Q. 1/2 the next. Q: Technical problem before or after pre-announce? A: After announcement. Q: Defer rev in guidance? A: some of it. Q: Outsourcing is trend, is LMNE going to this trend A: Moving production to our Taiwan plan. Re-structuring to a just in time mode. Q: Lead times? A: Depends on parts. Some in inventory. Passive can response quickly. Actives, some parts can take 14 to 60 days similar to before slow down. Q: Turns? A: Worst than last Q. Below 1 in Q3. About 2 in Q2 Q: What are you doing to re-position company. A: Adding distributors. Add more sales in China. Looking for new customers. Adding new initiatives on products. Q: New policy on payables? A: No. Payables down substantially but no change. Q: BtB? A: No comment. Don't disclose. Q: How does slow down effect product categories? A: Across the board slow down. Actives and passive slow down the same. Same for volume and ASP's effects. Q: Different between datacom and telecom? A: Products in metro and access. Seeing more pressure on long haul. For example DWDM on long haul passive worst versus TDM and metro products.