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Technology Stocks : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Daniel G. DeBusschere who wrote (28213)	1/28/1999 1:05:00 AM
From: Rainmaker	Read Replies (6) \| Respond to of 36349

Here is my synopsis from today's CC. General Facts Product Revenue (4Q%; 4Q$; 3Q%) Note: due to % rounding, numbers do not equal 100% & $ slightly higher HiGain - 64%; $38.8M; 64% OEM - 2%; $1.2M; 2% PG Family - 22%; $13.3M; 18% Campus - 7%; $4.3M; 6% Megabit - 2%; $1.2M; 2% Royalties - 5%; $3.0M; 2% Gross margin - 42% for FY98 Gross margin - 49% for FY97 Total cash - $234M Repurchase 1 million shares since buyback announced PG Plus approved by one ILEC Avidia launched; trials underway G.lite testing underway ADC/PAIR HDSL2 solution developed and tested Non-proprietary wideband T1 access developed T1/E1 (HDSL) Sector Surprised by rapid BA T1 decline [T1 only!!! PG Family and "new product" (???) there] No other changes in marketshare at other accounts T1 price declines continued, but moderating and may have finally bottomed Continued cost reductions Secured sole source T1 business with Level 3 and Nextlink (CLEC) [competitive wins that were not based on low price] International sales up 13% - 25% for FY98 vs FY97; hot button for Pascoe - increase T1 pricing still tough next 2Q99 while cost reductions try to catch up with price declines T1 unit shipments increased by 30% in FY98 vs. FY97 [but price erosion is killing bottom line] HDSL pricing about 10% higher internationally SBC contract still undecided PG Family (small digital subscriber) Dominant position Will be increasing product delivery to a third RBOC soon Nice position with Sprint Grew 50% in FY98 Expecting similar growth in FY99 Expecting to be $100M business in FY99 Avidia Trialed and shipped for testing Small revenue expected in 1Q99 Pascoe spent most of his 3 weeks @ PAIR with customers & account managers Avidia is beyond a DSLAM Avidia is a traffic switch (my comment - holy smokes if it's truly reliable) Avidia is a multi-service network management ATM/IP concentrator Key area for Avidia is CLEC and ISP where there will be significant advantages Small orders coming in Testing (beta) at 6 customers Good feedback with promised 1 Mbps at 20k feet HDSL2 compliant with HDSL2 revenue through Avidia Avidia at Sprint; Sprint likely to select second vendor and PAIR is positioned for this (BTW - Sprint uses every other PAIR product) Pascoe wouldn't disclose margin on Avidia - "close to Newbridge's margins" Avidia win not announced yet $20M conservative estimate for FY99 is general guidance w/ great upside potential My comments FWIW Unit shipment grew at a tremendous rate, demonstrating increased demand for T1/E1, and DSL in general, in line with market conditions. PAIR revenues severely hampered by dramatic price erosions such that a 30% increase in product delivery could not absorb the price cuts. The lost of primary supplier status at BA exacerbated situation. PAIR has clearly shifted customer focus to the exchange carriers that are moving faster than the RBOCs to rollout DSL services. Two competitive wins that were not based on price, but on product performance, highlight 4Q98. PAIR has trained analysts to focus on Avidia and systems, not T1/E1 as indicated by the lack and type of questions asked. Only 10 - 20% of the questions touched on T1. Of those, the focus was on projections for future price declines. There was a definite warm fuzzy among PAIR and the analysts. I think Pascoe has given PAIR significant recognition and credibility in the systems arena. Looking forward to him schmoozing them at the technology conference tomorrow. PAIR maintains my D grade for PR (to the public at least). This was raised from an F. We were not informed about the Level 3 and Nextlink wins; Avidia being tested with 6 customers; PG Family very strong - expecting $100M this year or another 50% growth; Avidia win has not been announced. Good luck to all PAIR investors.