All, today's video conferencing and voice over IP sectors share some interesting and strikingly similar challenges in the emerging global networking model. Not the least of which are some of the protocols they share, and the wait-and-see attitudes of potential takers while the technologies prove in. All the while, the lagacy platfoms are growing older by the day, while some may actually be nearing the resource-exhaust stages. Sooner or later decisions have to be made.
I came across this VTEL release, below, that demonstrates some of this very nicely. It doesn't speak to the exhaust problems, per se, but if you've ever even been close to being charged with managing a present-day corporate telecomms environmnent demanding of ever improved integration capabilities, and if you can read between the lines, you'll know exactly what I'm referring to.
Enjoy, Frank Coluccio
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VTEL Reaffirms Industry Breakout Scenario
AUSTIN, Texas--(BUSINESS WIRE)--Nov. 6, 1998--
Sluggish Hardware Revenues in First Fiscal Quarter Result from Customers' Extended Purchase Cycle During New Technology Evaluation
Technology leader VTEL Corporation (NASDAQ:VTEL) today acknowledged that customers and prospects looking to enhance their businesses with videoconferencing capabilities are weighing the impact of the imminent industry breakout in their near-term decisions to acquire new large group hardware systems.
Conversations with key customers confirm the extended evaluation of new technology related to the eventual 'IP everywhere' platform has accelerated and is causing customers to pause before large enterprise deployment purchase decisions are made.
[[fac edit: this is preciely the dilemma facing many large buyers of PBXs today, as they strain to peek over the horizon...]]
Consequently, the longer closing cycle associated with customer purchasing commitments caused the company's fiscal 1999 first quarter sales to fall significantly short of management's expectations.
Recognizing that fiscal 1999 results will be impacted by customer hesitation to close purchase commitments, Jerry Benson, VTEL's president and CEO said, "We anticipate the industry will experience near-term turbulence as the three primary industry drivers -- compatibility, usability and affordability -- converge.
For the longer term, however, this transition is in harmony with VTEL's business and technology strategy, as we are well positioned for growth by providing our customers with new investment protection guarantee programs."
Benson went on to say that despite the business turbulence associated with the breakout, VTEL's entire management team is prepared to manage the company through the transition at lower levels.
Rod Bond, VTEL's vice president and chief financial officer, indicated, "Our preliminary review of fiscal first quarter sales suggests that, while software, network, personal/workgroup and global services met expectations, enterprise hardware revenues fell substantially short of expectations.
Although final consolidated results are not yet available, the revenue shortfall will have a significant impact on first quarter earnings performance." Bond added that the company is finalizing reviews of capital and operating budgets in order to achieve positive earnings and cash flow performance at lower near-term revenue levels.
Management previously stated the company's strategic, long-term direction is to leverage VTEL's open systems based on the industry standard H.323 for video over Internet Protocol (IP), as well as VTEL's unique video networking management, administrative and diagnostic software.
The company expects to gradually become less dependent on hardware sales as software and services become a more formative portion of the revenue mix. Based upon customer discussions at TeleCon XVIII in Anaheim, Calif., management remains convinced that customer demand for Digital Visual Communications (DVC) remains strong over the long term and provides a solid foundation for VTEL's leadership in Video Commerce(sm).
"With our internal infrastructure improvements essentially complete, taking our business to the next level requires that we protect our installed base as we internally navigate the breakthrough," said Stephen Von Rump, chief marketing officer for VTEL.
"Therefore, we are formalizing our ongoing customer dialogue by establishing a Customer Council, which will help us ensure that we are providing customers with the tools and resources they need during the transition to manage their businesses efficiently." Von Rump also said that by stimulating demand for more feature-rich systems, the company will fuel increased sales volume through a combination of pricing and customer investment protection programs.
"This action, together with our recent launch of the SETTOP 250 and our broad array of global customer services, will ensure VTEL retains the industry's technology and product leadership position," said Von Rump.
VTEL Corporation is the world's largest developer and manufacturer of Digital Visual Communications technology. The company is committed to expanding its leadership position by providing the world's most innovative video networking software, service and systems. VTEL's cutting-edge products bring visual communications from the desktop to the boardroom, incorporating data networks and the Internet. With headquarters in the United States, Europe and Asia, the company distributes products through value-added resellers and partners in 61 countries. VTEL's Digital Visual Communications products are deployed in the most advanced corporations, healthcare facilities, educational institutions and government operations around the globe.
This release may include projections and other forward-looking statements that involve a number of risks and uncertainties and as such, actual results in future periods may differ materially from those currently expected or desired. Some of the factors that could cause actual results to differ materially include rapid changes in technology, changes in customer order patterns or order mix, the intensity of competition, the cost and availability of certain key components, the company's ability to manage product transitions and inventory levels, product pricing pressures, sudden or unexpected changes in demand for VTEL's videoconferencing systems and litigation involving intellectual property and other issues. Additional discussion of these and other risk factors affecting the company's business and prospects is contained in the company's periodic filings with the SEC.
VTEL is a registered trademark of VTEL Corporation. Digital VisualCommunications(sm) and Video Commerce(sm) are service marks of VTEL Corporation. |
