FIBR Q3 CC calls:
Difficult to provide rev guidance.
Focus to grow rev and reduce cost.
Want to gain confidence of the street.
Will not provide guidance till internal forecasting is consistent.
Financials:
Rev 10.1 mil, 10.8 last year down 7 per
2.1 mil from Intrada Networks last year, spun off in August 200, so no rev this time
16 percent year to year otherwise rev growth
Q-Q increase rev 26
Merit grew 9 percent Q-Q
Sorrento Inc grew 30 percent q-q
85 percent of rev domestic
15 percent in Europe
No rev in asia. Making progress though and rev in future from this region
14 customers in Q, 60 percent of customer base
2 new customer
1 was new customer from last Q annoucned but no shipments, Looking Glass Networks
largest customer accounted for 38 percent of rev, last was Q 14 per of rev
On a aggressive install plan, expect good rev from them in Q4
25 customer total for the year to date
Shipped to 9 additional custumers, but most concentration in top 6
5 customer accounted for 95 percent of rev
2 nd largest customer was a new customer, 19 per of rev
GM 13 percent, includes 2.4 mil of inventory write off
Excluding write off 37 percent
write off of inventory will help in futurer
Op Ex:
Cost reduction plan, employee count down 20 percent, saving 6 mil as result
High count 280 for the year, currently 200 now
No effect
$2.7 mil reserve, related to 5 mil loan based on exercise of stock option on loan to former CEO.
14.0 mil Op ex in Q, 14.7 mil Y-Y, 10.9 mil last Q
4.5 mil in write offs.
See benefits next Q and Q1 next year
3.5 mil in interest expense due to debenture financing.
Model going forward:
Cash flow positive major objective.
Cash: 23.6 mil ver 3.6 mil Q-Q
Restricted cash 10.3 mil, NASDAQ financing, no longer restricted
AR 10.7 mil ver 16 mil Y-Y 12.3 mil Q-Q
DSO drop to 95 vers 140 Q-Q
Inventory - 19.6 mil ver 29.0 mil Q-Q
2.4 mil write off in obsolete inventory
returned $7.8 mil in parts, cost 300,000
see favour pricing on new parts
investment on securities: 6.9 mil shares of NSIL, $20.4 mil valuation at time of close of Q. Now $25 mil today
NSIL bought by DIGI. Conversion is 0.65 shares of DIGI per share of NSIL
Can get cash equivalent of $7.5 mil if desired or can sell to institutions, up to 2 per per Q
Current Liabilities 19.7 mil ver 29.7 Q-Q, essentially same as 19.6 in January
Long term debt up from 5.1 to 10 mil due to debenture
Equity 20.0 mil ver 39.7 mil, due to loss of operations
Model going forward to get to cash flow positive, focus to control expenses and rev growth
GM to 40 percent at higher rev levels, 45 per at break even point.
Break even at 20 mil to slight below per Q.
Q: Color on rev distribution, how much shipped to PTT and ILEC's?
A: 14 customers in Q, 5 make up 90 per of rev, cable company, utility company, 1 or 2 system integrator, small amount to CLEC, one utility company, internationally ILEC,
Cable companies, ILEC and utilities companies most of sales
Q: Backlog?
A: No comment.
Q: During Q returned parts?
A: Yes. During last call, shipped a large amount of product shipped by a vendor. It was supposed to be shipped over a longer period of time. Resoluted dispute in Q. Returned parts.
Q: 2 new contract today. Is that in addition to 3 new announced last Q.
A: Last Q had 23 customers. Had 25 this Q. One of new customers in Q Looking Glass network.
Q: Jump Start 2000 new product? New features? How does this complement
Gigamux product?
A: C-WDM based porduct. Very important and significant move to expanding market. Access and access related segment. Sold with gigamux and other carrier class products. More flexible and expanded offering.
Different from gigamux. In one box all features are included. Can drop one box into the customers premise and give new features.
Q: New board members, how will they contribute?
A: 3 new, much bigger and broader guidance on corporate governance
Q: how much of rev this Q in deferred rev
A; In July Q has deferred rev of about 2 mil , 2 customers, 19 percent customer this Q, was one of those with deferred rev this Q, have a little left this Q but not material
Q: How many Europe customers, DT?
A: Most of rev in Europe out of Germany frrom an ILEC. 4 to 5 customers in Europe. DT is a good customer. Europe a strategic and important market
Q: Jump Start 400 in Europe?
A: Should be important in Europe and other markets
Q: No guidance for next Q?
A: Yes
Q: Since no deferred rev this Q, rev down next Q
A: No comment. No shortage of activity of customers review our product. Rev in Q relate more to commit of carrier to ship.
Q: Level of sales to break even at current OpEx?
A: 18 to 22 mil per Q
Q; 19 per new customers ILEC, MSO, cable operator?
A: System integrator, end customer a carrier
Q: Equity stake in NSIL, can sell at any time?
A: Yes, restricted to 2 percent of outstanding after the merger, can any amount to institutions
Q: Plans to liquidate NSIL position?
A: Will meet with new management. Try to maximize value.
Q: Cash flow from operations?
A: Used 9 mil in Q. Payable paid down. Better collections.
Q: Slow down end user optical demand, Teramatrix update?
A: Finished pre-production units. Slow down in many segments for the carriers. Chances of a significant optical switch deployment is very low. Concetrate on Jump Start as a result to gain market presence and share.
Q: Jump Start competition products
A: ONIS 2500, our product more competive on feature on size and cost of ownership and use, anticipate more competition from Europe and Asia
Q: Sorrento approach to OSMIME? Cost?
A: Strategically important. In process of getting OSMINE certificate, expensive process, modulating the pace of going through this process to conserve cash
Q: In last 3 to 6 months, seen surge in cable spending, T, Time Warner, RSTN contract announcement. Is FIBR involved in this space?
A: T is still a customer. Cable is a strategically important to use. Way ahead of competitors. Cable market is a subscriber based market. Services will drive demand. In Q3, some new applications driving rev. One of opportunity mentioned, we were a participate in upgrade the network
Q: Timing of roll out of Looking Glass?
A: Working in a few markets with them. They are looking at new opportunities.
Q: Why no rev from Asia given efforts? Any rev next Q?
A: Newest market. Started effort last year. Expect significant results in future. High possible for rev from Asia next Q.
Q: Type of customer? Carrier?
A: Carrier. Major one.
Q: Where does FIBR product fit?
A: All fit into metro core and access network. Most of future Asia deployment in metro and access.
Q: Europe off as a percentage of rev? Changes required?
A: Targeting Europe for a long time. Q-Q comparison difficult. Trying for steady growth in all segments.
Q: Color on Series A issue and lawsuit?
A: Top priority is to resolve that matter. In negotiation in regards to subject.
Q:Timing of settlement?
A: No comment.
Q: 2.7 mil charge on Op Ex. One time charge, no? Max liability 5 mil, more to come?
A: Write off is setting up a reserve. Calculated based on collateral shares.
Making balance sheet conservative. Not final number.
Q: 5 mil max?
A: only counting on 2.7 mil reserve so far.
Q: Changes to competitve environment?
A: No significant changes.
Q: Customer guidance on spending for 2002?
A: Customers sharing business plan. In current conditions, most customers reluctant to give long term commitments
Q: Cash burn was 9 mil in Q?
A: Yes
Q: With cost saving, what is burn next Q if same rev?
A: GM impacted by rev, do better when we ship more product, if 12 mil rev a Q will have 4 to 4.5 mil burn rate
Q: Have 5 Q's of cash if we stay at this level?
A: Yes, if worst cash. Don't plan to stay at this level.
[Harry: Management's handling of the call is still poor and the analysts covering the call do a pretty poor job also.
Management still does not give any indication it has a strong road map of where it wants to be. There was no guidance on the current state of the market segments. They could not even give an accurate account of the customers by segment during the Q on the call. They did not refer the question to be answered off line due to time either. The companies cash level are poor given the expense of OSMIME certification. The fact they are holding back to conserve cash though a reality given their current cash level will leave them standing at the alter when the carrier actually ramp purchasing. The flat rev q-q is a positive in this difficult environment, but I have not idea of the quality of the earnings. This company still remains a mess.] |
