Twister Tom ....no its not a category 4, its scarier
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CEO INTERVIEW
TWISTER NETWORKS “TWTN
Tom Heysek: Good day ladies and gentlemen. My name is Tom Heysek I am the Director
of Research for Asian American Capital. Today we have with us Mr. Bruce Thomsen,
who is the Chairman and CEO of Twister Networks Voice-Over Internet Phone Company
and Mr. Steven Dao who is the President of Twister Networks. Mr. Thomsen has over 40
years of business experience, the last 20 that were over in international markets. Mr. Dao
is the telecommunications specialist, also at the leading edge of technology that we deal.
Mr. Thomsen, it is our understanding that companies like AT&T and Cable Vision have
recently announced a major move into the Voice-Over Internet space. Good or bad for
Twister?
Bruce Thomsen: Great, not just good, great!
TH: Why is that?
BT: Number one, it defines the market, number two, it will enhance the overall
knowledge of Voice-Over Internet as a means of communication. We are actually the
small fry compared to AT&T, but using an analogy that I once heard, you don’t have to
be the biggest or the fastest to beat the bear out of the forest; you just don’t want to be the
slowest in the race! So, what we want to be is on the ground and doing things in China
and Vietnam and the United States – as part of our business strategy. But we don’t have
to be the biggest; we just have to be faster than the slowest.
TH: Now, are you manufacturing earphones or are these outsourced to other parties?
BT: These are outsourced. We are not a manufacturing company; we are strictly a
marketing company.
TH: Okay, but this is a Twister phone, am I correct?
BT: That is correct, that is made for us.
TH: And just to be sure I understand this, if I have your phone and an Internet
connection, I can make a phone call anywhere in the world?
BT: That is correct, as long as you plug it into the Internet; you are online with a phone
call.
TH: Now, I understand that China and the United States tend to be your initial
markets that you are focusing on?
BT: That is correct.
TH: But the difference is, as I understand the company literature, rather than selling in
one’s and two’s in the retail level, you are going for big volume, what does that mean for
our viewers?
BT: Well, basically, the viewer has to understand that we are not looking to be selling
individually as the store would on the street. We are looking for the blanket order from
the distributor, and as such, I have gone into China in the last two weeks and retained a
master who is going to go after master distributors in 7 of the major international trade
zones. China has 26 of these trade zones, so we are dealing with almost 1/3 or 1/4 of the
country. And when you look at the country as a whole, we are in the Eastern side of
China, which is the major economic side of China.
TH: The purchasing power, don’t they have to be pretty wealthy people to buy these
phones, to use your product and buy your product?
BT: This is something that has amazed me over the years, about how little the American
public knows about the purchasing power of China. There are 300 million middle class
Chinese in China today – this represents a huge market. Lets just take 1% of that
market, 3 million people.
TH: And every one of them a potential Twister customer!
BT: They could all be Twister customers.
TH: Now, as I recall, you mentioned Vietnam in your market outlook.
BT: That is correct.
TH: What can you update our viewers on Vietnam?
Steven Dao: Okay, a good example of population in Vietnam is that the population would
is over 80 million people. We are just talking about 5% of the 80 million people. So
that you can see there is a great demand in terms of using the VO-IP, we are looking at,
roughly estimate a little over 4 million IP phones.
TH: And the selling price is approximately $50 per phone?
SD: Yes, for that market, yes.
TH: So we are talking about some pretty substantial numbers. Timetable to penetrate this
market? Is this a low-hanging piece of fruit that you are going to pick off the tree, or is
this something that you need to work at?
BT: No, I think we would actually take that as being a major direction of the company.
One of the things that Steven didn’t mention is the, I will use the term of family-trees of
people from Vietnam who have come over to the United Sates in the 70’s and all the way
through. They are still linked heavily to the people back in Vietnam. So, in many cases,
you are going to be selling two phones for every one phone, because the people in the
United Sates want to communicate to Vietnam and vice-versa. If each of them has the
same phone it’s a beautiful situation for them. And Steven might want to pick up on that,
about the family tree.
TH: That is not just a Vietnamese thing. It is a Korean, Hispanic, Russian – but this is
interesting, with a 4 million person potential market, I just went through the arithmetic;
this is a 200 billion dollar potential here between China and Vietnam. But, sorry, I
interrupted you there.
SD: And also, in addition to that, the Vietnamese people who are living in Vietnam,
specifically the government, and the private companies over there that want to do
business in the U.S, so you can see that, besides just the family that wants to contact each
other, you are talking about business in Vietnam that are doing business in the U.S,
maybe Canada and different countries around the world. So you can see substantial
growth on the commercial side and not just the residential side.
TH: Didn’t you say that the government is going to be outlawing certain communication
vehicles with PIN numbers that would be in your favour? Can you explain that a little
bit?
SD: Yes. I think that we do have that in Vietnam right now. But most of the companies in
Vietnam that currently operate were going through the concept of the calling card. Which
is that they issue the calling card and there are the PIN charges. And lately in the last
three or four months they have come out with the dummy phones so they still connect
you to the Internet, but it is nothing else but a headset and then you have a PIN charged
into it. So, once we will be able to ship the equipment over there, one of the major
projects of the Vietnamese government would be to go out there and clean up these socalled…
TH: Renegades! Renegade
SD: Yes. They are going to clean this up.
TH: Why do they do this?
SD; I think the government wants to be in more control in regards to communication. Not
in a bad way, but to leverage the technology and managing the technology in the
proper way, in order to provide the good quality of communication versus that of
everyone coming in there and doing their business and then leave.
TH: So, ensuring a minimum standard of product I suppose is one reason, which would
of course enhance their receptiveness to international business. But, what about taxes, I
imagine that that is incentive as well?
SD: And then it would be revenue for the country by itself. Absolutely
BT: I think we have to look at the situation both in Vietnam and China in the same way.
The government in both the countries have done a move to a market economy but have
done it under a planned approach. They don’t want to have it explode around them. You
could use Russia as the pitfall for letting something just blow up in your face in the sense
that there were a few groups that took it over, but it was not to the people’s benefit. The
Chinese and the Vietnamese have taken a very consistent approach of expanding their
commercial aspect of it so that the people will benefit rather than just a few at the top.
We see a tremendous potential for this in each of our countries. I think that Steven may
want to address another issue there, which is the expansion throughout Asia.
SD: The other thing too is if you are looking back at the history of Vietnam, surrounding
Vietnam we have Laos, Thailand, and Cambodia. Those countries are always looking
towards Vietnam. Because the Vietnamese government hopes that one-day it will turn
Vietnam into Singapore or maybe Hong Kong.
TH: A commercial center of some sort?
SD: A commercial center. By doing that they have to leverage the technology. They have
to bring everything in to bring it up to that stage. Besides the Vietnam market we are
talking about maybe Laos being the next one, right next to us, that Vietnam can pass this
technology to them. So, that is one of the advantages that the Vietnamese government
wants to go out and say “this is the best” and “we want it in our country” and we want to
leverage this thing and be able to pass it on to our neighbour.
TH: So the Asian connection will be the first revenues coming into the company. As I
understand it you have already had some sales over there?
BT: That is correct.
TH: But can we assume that the by third quarter of this year, we can start to see some
revenues coming into the income stream.
BT: I think you can tell your investors that it is going to be substantial revenues, not to
just use the word revenues.
TH: Well, the numbers look compelling.
BT: I am a conservative; I don’t go by the wildest estimates in the business because I
would rather be underplayed than overplayed. You are always a hero if you come in
with more sales then you forecast but you’re not if you don’t. So we have a forecast, I
would think, relatively conservatively. In those forecasts, Steven is in charge of getting
them to meet those numbers.
TH: To bring the focus from Asia for the moment back to the United States. It is our
understanding that you are going to have an actual physical-presence of a retail store to
show the Twister product. Is this correct?
SD: Yes it is. We are helping a distributor in Orange County who actually opened the
first Internet Phone store, and we are very excited to have this store open, because we
are providing the IP phone product.
TH: The Twister product?
SD: The Twister product to the store here. And this is the first store dealing with the
Internet phone. This is where people can stop by, and chat, are able to look at the product
or even try it out.
BT: It is interesting Steven, I want to point that AT&T has stores all over the country
but they don’t have an Internet phone at any of those stores.
TH: That is a good point. Mr Thomsen, becoming a public company obviously provides
some advantages. Can you specify what some of those advantages would be that you
would not have as a private enterprise?
BT: Yes, very easily Tom. As a public company we end up having the advantage,
number one of going to the market should we need additional capital. Why would we
need additional capital? It may be that we want to acquire another phone company,
phone operator, another Internet provider at a later date. That company could be
here in the United States or it might be just as easily in Asia. So there is a definite
advantage of being public because you can then take advantage quickly of an opportunity
when it exists. You don’t always have to pay in cash in full for something because you
can also use shares of your stock to buy a company. You may go to a debt equity rather
than just an equity situation. There is a lot of manoeuvring within that area. And it also
leaves you with a fixed price for your shareholders should there be a decision later
on to be acquired by someone else. You have a known price in the market, which is
your share price.
TH: Established independently by market forces?
BT: Established independently by market forces, so your shareholders will be benefiting
in that respect as well.
TH: Competition is something that is kind of hard to put our arms around because there is
so many people doing it in a different way. Who would you consider your competition in
the markets that you are attempting to enter in this country as well as in Asia?
SD: I believe it will be AT&T, but actually this works to our advantage.
TH: How so?
SD: We started this first and then AT&T finally realized how important this piece of
technology is that they overlooked. Now, they have come back to the market, but we are
already ahead of the game. Now, we don’t have tremendous margin in expense to do the
marketing, but with AT&T coming right behind us, suddenly everyone knows Twister.
TH: Market Awareness!
SD: Exactly. And then they will say, “you know, there was this other company, Twister,
somewhere – so that is what they are doing.” So with AT&T coming in, it must be a
good technology. I think that it leverages it out and actually works in our best interest.
TH: What about the technological developments? Is there anything else in the industry
that might perhaps make your product obsolete or of less interest?
SD: I don’t believe it is going to be obsolete; it is going to be in transition. From the IP
phone, which is right now, connected to the Internet, the next thing would be some sort of
adapter so that you can use your conventional phone. Furthermore, when you are talking
about the conventional phone, then you can use your caller’s phone and are talking about
2.4 MHZ of 5.8 and when you step outside the arena then it turns into a mobile phone.
We just see that with the technology, we are getting better and better.
TH: And greater applications of the same fundamental core products that you can add on
to this.
BT: One of the things that we have an advantage here on Tom is that we are not the
manufacture. We are not saddled with an inventory of phones.
TH: No baggage.
BT: We don’t have baggage. If the protocol goes to a piece of equipment that allows the
user to do it with a phone…
TH: You change loyalty in a minute.
BT: We change and go with that and eventually just seagway up to the cell phone. This is
probably a good area to look at the Chinese market. Many years ago, 5 to be exact, when
I say many in China that is not a really good way of saying it, but in context of the
growth in the phone market, five years ago is old age. They made a decision government
wise that they were not going to build the exchanges all over the country in order that
landlines could be put down.
TH: You mean PBX boxes?
BT: The PBX boxes and the exchanges that are housed with all of the digital equipment
in it. What they have decided was to allow the cell phone to be the major phone in the
country. So everybody has the Internet and they are putting in the broadband capacity all
over China or all over the commercially developed part of China so they all have access
to broadband and the cell phone. So, I am seeing a transition here, in the long term in
Asia, from this type of a phone that we looked at here to being a cell phone of the same
type three or four years down.
TH: The pricing market for this appears to be $20-40 a month range. Is that where your
product is going to come in as a sale price to the market?
BT: We see it that way.
TH: There are not a lot of leadership possible.
BT: There is not a lot of leadership that you can take, and you are kind of constricted
there. You have got to stay within a certain range.
TH: All right, so once you meet the price parameters it is a matter of penetrating the
market and that is where you have made some progress in respect to markets in both
markets in Asia and the US as well.
BT: That is correct.
TH: Excellent. One final question Mr. Thomsen, what might I have asked or neglected to
ask that would be useful to our viewing audience.
BT: Tom I don’t think it is something you forgot or didn’t ask. I think it is an observation
that we want to communicate to the potential investors and that is the speed at which this
whole industry is moving. Lets just take a look: it took the automobile 50 years to
reach 100 million people, it took radio 25 years to reach 100 million people, it took
televisions 10 years to reach 100 million people. And it will be less than 3 years for
VO-IP to be at 100-million person level around the world. And we want to be a part of
that, and that is going to be our market.
TH: And Twister is in the middle of all that?
BT: You name it, it in the middle of it.
TH: Thank you very much gentlemen you have been very informative. And to our
audience, thank you.
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