My transcript of the Osicom conference call
You can listen to the last conference call at
tstaudio.com
I am told you can also listen or get the transcript to
the previous conference call at osicom.com
You can also read many things about Osicom and their products
there.
The transcript, unedited;
___________________________
The 981203 conference call.
Osicom:
Chadha
John Mason
Xin Change
Powel
Zaphiropholis
Makey
Pete
Sullivan
3 divisions all present. Separate officers for each one.
Par Chadha:
Sentiment: Before, we have always have dissapointing results, dilution, etc.
3Words Today. We feel good, business is good, we are going through a substantial
transformation of our business. All are going through expansion, I am pleased to
tell you. I am going to go through each of those segments and then
have the officers talk to you.
Size of each of the segments:
1. Far East business. Far East [bad] for many many quarters. In
fact, for this last quarter, we had 5.x Million revenue vs 9.x
revenue. Even with Asian crises, we have the following two
significant developments $90 million is to. Recently design win from
US West, now $12 million, plan to ship in the fourth quarter. We are
going from losing money for many quarters to a first profitable
quarter this (4th) quarter with $15 million dollars of revenue. It is
a substantial turn-around. We are still looking to sell this
division. Its margins are lower than the rest of Osicom. We are in
discussions of x different buyers. We will do this as soon as we get
a sufficient offer.
2. NetSillicon. has gone through a substantial growth in its
prospects $3million in revenue vs .91. We find this dissapointing.
One of our foundries delayed shipment of a chip. We therefore have
dissapointing results. We are seeking a second source to prevent a
reoccurance. 59 different design wins. We are maintining the market
leadership which we have had. Tucker & xxx did not finish the IPO,
(fortuitously) We have now been able to change this to a traditional
IPO. We will do this when market conditions permit. We have not
changed our opinion about the distribution of the remainder of the
shares of NetSillicon. We still intend to do this. We have brought
in Dan Sullivan as (CFO?) added marketing and sales, expanded in
europe, US, Asia. With Pete at the helm, .... Mike ramanas, ...
Renn Zaphiropolis is the CEO of NetSillicon.
Pete Peterson: President of NetSillicon. Market is receiving it
very well we has 2.5 billion impressions in the press in October. We
are confident that we have a winning edge and that we are going to
win.
Par: our goal for 4th quarter is to do $4 million in revenue in Q4.
It may be profitable next quarter.
3. Network Access: Management changes. IQX did not live up to our
expectations. We have had to refocus our marketing. All of that is
behind us. Sunil xxxx is in place. We have divided up the roles
with Bob Giles taking over distribution. Eric xxx has taken over
marketing for the entire network acess. $7.2 Million in Q3.
Profitability in 2nd or 3rd quarter. All under one roof at
Annapolis Junction. We will expancd revenue and add products.
Network Access is also going to turn around.
4. Key: Transmission Business. $3.8 million dollars of revenue in
Q3. We are sitting on a market which was non existant. A year ago,
when we started talking about Gigamux, the research organisations
were focused on long haul. .... This is now a 1.3 billion dollars of
this market. Our near term goal is to get 10% of this market. We
intend to maintain a market technology leadership. We intend to turn
this into [profit]. We have to have a vision. I would like to have
Ron Makey talk about the vision
Ron Makey: Maintain our technology leadership. We have ongoing
developement in 1. access 2. Transport
32 channels is enough for today. Later we will add more channels.
New market DWDN. Strategic partnerships. put DWDM will be embedded
in other vendors equipment. We will continue to lead the market into
all optical network. Add drop, automatic protection switching. We
see communications moving to optical to reduce total network costs.
Par: Vision. Original: vs AddDrop vs DWDN. We have been
implementing them with a view that we move the market forward. We
intend to be the market leader. This means sales 78 evaluators. 22
in the final evaluation stage (one evaluator in China). The
customers who have bought in the 3rd quarter have continued their
buying patter. Xin:
Xin: China. Sales. Cannot elaborate, It is a very sales oriented
project.
We hope to have a phase 3 evaluator in china if Xin is successful.
How is leasing helping? How are the seminars going? James Zikovsky:
I am at an airport. Our technology direction. In DWDM, there are
several things we do. In contrast to long-haul, we are not solely a
rescue mission. Our second thrust is the access side. In this way,
we will drive the demand for fiber capacity. Spirited questions.
Adding robustness for a Sonnet ring. Atlanta was attended by many
significant customers. We have been visited by institutions as well
as carriers. We are going to people with a message, not relying on
being only a rescue mission.
somebody: The opportunities are growing 100 fold. Europe is growing
faster than we can keep ahold of it. We are looking for partners.
The major telcos and financial entities are major opportunities.
Par: Europe is diffent from US. Some sales are indirect. somebody:
we are putting contracts in place with our partners in each contry
throughout Europe. Europe is full of rescue missions. Companies
looking to expand their ability to deliver bandwidth. Implement and
close various sales. Lease program can be very important. It takes
an organization which is prepared both organizationally and
financially. What would happen if we got a big order?
We are very flexible. have 10 and 100 capacity to expand. We have
good relationships with key vendors. We can immediately respond to
any ramp up in sales. 200-400 in 1 month 4x in 2 months more in
short term. 77 evaluators, busy building gigamuxes for evaluators.
We are ready for ramp up.
Par: We have recorded losses, We are ready to record profits. We
will make sure that we are ready financially to handle success. We
are concerned about dilution. We are now leveraging our balance
sheet to get credit. Borrowed money, not equity dilution. We got
$1.5 million repayment from ABCN.
VP of strategic relationships. From March of 1998. Emil,
Strategic Partnerships. In US. Emil. Developing relationships with
companies with complementary products. Service providrs CLECS LECS.
With FORE Systems. We are demonstrating interoperability in CA now.
Just as an example. We expect to continue develop our relationship
with FORE. [somebody else mentioned?] ... video output... Some big
companies are interested in our DWDN initiative. I hope you will
have more. Par says 5 more. up from 2. (strategic relationships)
(Fore and NEC).
Infrastructure in Europe. US. Design team. Credit facilities. We
are ready. Lead with 78 evaluators. The time has come to pass that
into revenues. We are prepared and our goal is to insure that none
of our competitors are not able to [catch up with our lead]. It
takes from 7 to 18 months to go through the evaluation cycle. We are
the first ones to .... Multiple customers, 5 products. We are
preparred. If we just meed what we did in the 3rd quarter. (3.3
million in NEW revenue.) We expect substantial growth. We are
stepping closer to our goal of profitability. We will be very close
to profitability in the 4th quarter, but we cannot promise
profitability. All due to growth of new products.
Dilution has been a big concern. CSFB. Nov 6 announced some
redemtion, etc. I can tell you that since that time, we have done
one more thing. The dilution has reduced, down from 1.6 million.
down to 1,081. We have reduced outstanding shares by 600,000 shares.
That trend will continue. I hope to share news about sale of
Uniprecision soon. ... Strategic partnerships in Europe. New,
strong management. Photonics (DWDN).
Although I feel good that business is good, it is not good enough.
Our goal for the comming quarter is to make Osicom profitable.
QUESTION TIME. (I had to go get my son from daycare)
OK, later
ABCN stil owe us $400,000. We still have the equity stake. They
are working on a secondary offering. If the secondary offering goes
through, our equity will be worth a lot [my summary].
Japan wireless device. Our order is for 400,000 units. the market
is over 7,000,000 units. That is the customer who ordered the
400,000 units has a customer base who already uses the wireless
service. Therefore the sale is 400,000 into a market of 7,000,000.
(Implied there is some more potential there).
Media One: Deployed. One installation. It has translated to other
installations. We intend to address as many of the other Media One
locations as we can. Q how many actual units? A. I cannot answer
precisely. Call me or We will share it in the next CC.
Q China: A: paid $11 million. 11 possible buyers 9 strategic buyers,
2 financial buyers. Q: Nice Sale A: Multiple of the purchase price.
Business will make $1 million after tax profit per quarter, how much
to you think it is worth.
Q: How many have dropped out in Gigamux evaluations. A: none. The
lead we have [vs competition] in evaluations is pretty substantial.
Q: Range of potential orders for 78 evaluators. What would that
revenue look like to the company. A: That's a tough one. I don't
have an answer. Our sales forcast is not a public number. Par 10%
of the market is a very conservative and discounted number. There
would be a credibility problem if we stated our working numbers.
Q: Who is the main competition in each area. A: Transmission side.
Several expected to come out with product in 1-4 quarters. Cover
cable TV, Cable broadband, aDSL, DWDM. (each of [somebody.
Cambrian. Ciena] has announced products.) Our product is a proven
2nd generation product.
Par's Phone number 310-581-4030.
Q: IPO. Tucker Anthony. who else. A: Other firms have been
soliciting us. Q: Retained ownership percent? A: That determination
has not been made but 70% retained ownership is reasonable, 30% in
IPO. Q: A: We have our work cut out for us in the Network Access
division.
Q: Far East, $1 million profit How much of the SG&A would be
allocated to Far East. 1/4 alloc? A: 800,000 loss in third quarter.
Q: Fastest way to raise money would be to get the net file deal done.
A: Telephone companies pay early and reliably. Q: Net file for
NetSillicon A: Plan to ammend offerint to IPO and bring in the
numbers and accomplish it in the comming weeks and months.
Q: PR Boston Comm. did an adequate job. A: We have narrowed it
down to a new PR firm which is investor oriented. Q: Both new and
Boston Comm. A: Yes we need both.
Q: Are we indeed the only company out there right now which
currently shippable. A: As far as as I know, we are the only ones
with a true Metro DWDM. There are some Long haul Boxes adapted for
use in short haul.
Par: We are looking forward to giving you better, more bullish, news
soon [perhaps meaning next CC]. |
