TELM CC
2001 start as a private company
2000 build foundation of company, 2001 showed we were here to stay
Gained market share in space, DYN and Q were customers, market share numbers show customer wins are design win.
Competitors have products that have no distinguishing features, commodity sales. Out wins will continue over many Q's.
TELM number 2 and gaining share, assumed lower TELM Q4 result than we delivered and higher share numbers for number 1 vendor than they can deliver
Exceed numbers in all 3 Q since public, rev and EPS beat every Q
Now cash positive. 2 Q's before expected
219 mil in cash, virtually no debt, worst telecom market seen by management
25 per rev growth q-q
46 per GM, up 2 per q-q
positive 2 Q's early
540 people, no lay offs to date, expected a head count of 600 by now
investing in new products
Aurora line of switches, only core switch that has grooming, real time provisioning and millisecond restoration in a shared mesh architecture.
Products unmatch for scalability, capacitiy and reliablity.
New customers, still none to date
Expected one before end of 2001. Now expect contract in 2002.
Targeting top 25 carriers around globe and smaller well financed customers
New customer activities. More customers with potential customers than in Q3. In all key test situations. No one
has selected a competing product at the core.
Cable and Wireless: No news
Qwest: In April 2001 ,announced 400 mil over five years, amended, Q requesting more flexibility. More meaningful deployment later this year. Q has warants for 2.7 mil shares.
DYN: Oct 16,2001 largest optical shared mesh network announced, TELM switches in 44 of 77 cites.
2001 recognized rev from DYN and Q in all 4 Q's.
NEC partnership helping to close deal around the world.
Talking to other D-WDM transponders vendors for inter-op. Will be only switch to support multi-vendors.
JBL primary contractor.
Extending lock up for 17 mil shares by management. Can sell in Feb.
Q4 Financials:
Cash business.
Rev recognized only after acceptance. Rev for mainten
Rev 50.2 mil up 25 per Q-q , 65 per over Q2
Rev for year 136.4 mil up for 15.6 mil Y-Y
GM 23.4 mil up 31 per q-q, 80 per over Q2
GM 46 per ver 44, 42 and 40 q-q
Op Ex. down as a per of rev, better than expected
540 head count, flat to Q3,
add 100 employees in 2001 total
In Q4 income of 109,000 ver 9.9 mil q-q, 15.3 q before that
income 1 per of rev
One time charge of 19.2 mil in cancelled Q warrants in Q4
1.37 mil shares returned from warrants
Net Income 1.7 mil in Q4
EPS 1 cent vers 5 cent loss q-q
Cash 218.7 mil ver 226.4 mil q-q
7 mil burn in Q. less than 20 to 25 mil guidance due to improved AR management
Q1 cash burn 12 to 17 mil
Q4 Inventory 54.2 mil down 20 per Q-Q due to increase shipments
Inventories will decline with time
Good will write offs due to acq of Asorta Fiber Networks(?) and AT&T intellectual property.
58.4 mil of good will. will not be amortized further going forward
127.0 mil shares out fully diluted (112.4 mil before)
Q1 guidance:
Rev 52 to 55 mil, up 10 per q-q
GM up slightly to 47 per
Op Ex flat as per of rev
Int Income flat q-q, assume flat to down int rate
EPS positive at 1 cent
127.7 mil shares out , shares will increase slightly
Tax rate: nil in 2002 due to losses
288 mil in rev for the year,
reasonable linearity in the Q's in 2002
In 2002 see core continuing to grow, analyst see 100,000 D-WDM port will be shipped in 2002. Carriers cannot reduce Op Ex by 1/2 without TELM products.
Q: Qwest per of sales? Up in Q4? Q1?
A: Q and DYN more than 10 per. Will continue to grow. Up in Q4 as well.
Q: Qwest cap ex cuts?
A: EMAIL caused 20 per loss in stock price.
Q: Pricing? Some competitor reducing per port cost.
A: Really pricing pressure in SPS edge switches. Not seeing pressure in the core. Our product is a strategic buy not a tatical buy.
Q: NEC relationship? Only submarine network interface?
A: Seeong submarine and terresterial networks. Seeing more terressterial than submarine to date, but still significant terresterial opportunities.
Q: Component cost on transponders? Will that help you in the next 12 to 18 months?
A: Seeing a lot of improved in chip counts. Pricing is better, as well as power and footprint.
Q: Only OC48 product as TLAB is out of segment. Competition from core director
A: Three companies shut down products program that are similar. Customer know SONET works, expense for cap ex and op ex. As a result, customer are more worried about reliability. No us vers STS1 standard.
Q: Q spending 80 per of cap ex on maintanence, will they buy more cards?
A: In 2002 will see rev mostly from chasis. Later in 2002 will see more card sales.
Q: Inventory level down, why with rev ramping?
A: JBL helps. Component pricing helps. JIT model not quite, but close. As rev grows fixed cost will be distributed.
Q: DYN deploy switches in Europe yet?
A: No, all in USA to date. DYN going forward will come from USA and Europe. Europe in 02.
Q:
A: 1H 02 believe we can get to rev level from current customers. Expect rev from DYN and Q in 1H 02.
Q: D-WDM vendors to integrate transponders? Many customers
looking for feature, but NT may only have it.
A: Q4 carriers pushing issue NT,CIENA only operates only on NT and CIEN transponders.
Q: DYN, in Europe most chasis, USA card
A: Yes. USA 44 cities expect mostly cards, Europe chasis initially.
Q: 2001 rev 136 mil all from DYN and Q? Some DYN and Q will contribute the same amount in 2002?
A: Yes, 2002 will more than in 2001. Rev to be 2/3 for DYN and Q. Rest from new customers. C+W conservative part of that.
Q: 19.2 mil charge with warrants. Where does it show up on statement?
A:
Q: Split on full year bases between DYN and Q?
A: No more color in 10-K filing.
Q: Spending on Full Spectrum product timing for Q?
A: No rev for full spectrum in 2002 from any customers. Not ready this year. Will spend money to develop in 2002, also spent in 2001.Delayed some spending on Full Spectrum product. Some technology not there yet. Still requires more research. Some tech issues not as hard as anticipated so overall cost will be less. So still expect to bring it out in 2002. Timing and amount of money to achieve is less expected.
[Harry: There is some skepticism given that Q is spending less on the build out and more on maintenance. The fact that TELM is guiding for more rev from DYN and Q in 2002 goes against the general trend of reduced cap ex for the year by most carriers. The 10 per q-q growth when most people are predicting flat to down is impressive. It is down from the 25 q-q rate of last Q though. Part of it may be the normal Q4-Q1 weakness or it may mean their ramp in rev is slowing. On the first point, what is normal any more? This has been a wierd cap ex year. For point 2, it would be normal for the rev ramp to slow after such an aggressive ramp.
TELM trades near cash at these level, they are still the only product that will inter-op with other vendor transponders and the only product that offers the next generation of SONET bandwidth management. It should be worth a bounce play when the market turns.Anyone hear the Q call? How health are they financially. ] |
