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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: rupert1 who wrote (3712)	1/21/1998 9:53:00 PM
From: WiseGuy	Read Replies (2) \| Respond to of 6980

Vepoc, you pointed precisely the core of Bay's problem. > I must admit I was surprised this a.m. when House said on CNBC that > Asia represented 10% of total revenues. He also brushed it off as > insignificant. We had been told on this thread for several weeks > that it was 4% - don't know where that came from. Bay has been having trouble sending a clear and consistent message to the investment community. Yes, Bay said before Asia exposure was 4% and now they said it's 10%. In the conference call, Goldman Sachs asked about expectation for router growth and Dr. House said it would level off, then Steve Pearse said he saw router sales still strong, and then Dr. House said again he saw flat to modest growth. There are many more examples but you get the idea. Also, Bay is rather vague on a lot of statements and answers, leaving room for a great deal of interpretation. You would not want the analysts to have room for interpretation! We have already seen what they can do. Heck, do they care, since they don't get affected at all for being wrong? What ever happened to the DLJ guy and to his associate the Motley Fool for forecasting gloom and doom for Q2FY98? Answer: DLJ came back again trying to screw Bay once more in Q3FY98. To address the key issue of why Bay's down today, and that is, because of concerns over Q3 revenues, the reasons offered were: - Book to bill of .96 - Small sequential sales decline in U.S. - Channel inventory from 6.5 to 7.5-8 wks range - Product transition to Accelar, possibly cannibalizing BayStack products. For book-to-bill, management noted Bay curbed order taking until the last 2 wks of December. This is good practice to not make your customers have to wait. For sales decline, others on this thread have pointed out that it's not Bay specific. Channel inventory - management indicated it was appropriate and they felt comfortable. Product transition - Accelar and BayStack switches address two entirely different segments of the market (L2 vs L3, and edge vs core), so there should not be cannibalization. Management also pointed out that Centillion products will be growing with Accelar and router sales will at least remain flat, so where the heck is the cannibalization? The BIGGEST part that makes me mad is how the analysts could have said that Bay stated 3Q would be seasonally slow. Dr. House clearly said that Bay will experience accelerating growth in the 2nd half similar to that of the 1st half, despite a seasonally slow 3rd quarter . I think Dr. House intentions there was to keep expectations down and to also show that Bay will experience growth in spite of seasonal weakness. I guess the analysts' brain is big enough to retain only the last 4 words of the statement, being 'seasonally slow 3rd quarter.' Incredible how few of the positive seems to be talked about. I think that deep down inside, these analysts feel that Bay will definitely be going up, so perhaps they wanted an opportunity to buy. Anyway here are the positives I've found. I was extremely satisified with results and performance. - Bay has surpassed 3Com to become 2nd systems networking player. - Bay is eating Cisco's pie. - Demonstrated the best growth among COMS, CS, CSCO over last three quarters. - 1,000+ new customers (65% growth) in North America alone over last 6 months. Bay is demonstrating they can clearly win accounts!! - Margins will improve 1/2pct this quarter. - Gigabit to ship for revenue this quarter, ahead of COMS, CSCO, CS. - Accelar to ships 'thousands' of units vs 'hundreds' of units in Dec '97. - Remote access really picking up steam (100% sequential growth)! I'm tired. Apologies for any typos. ptv