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Technology Stocks : COM21 (CMTO) -- Ignore unavailable to you. Want to Upgrade?

To: Joseph Waligore who wrote (280)	4/21/1999 7:04:00 PM
From: pat mudge	Read Replies (2) \| Respond to of 2347

Sales in Europe are seasonally slow in Q1. Also the Q498 rev. figure included license income from 3Com, skewing the comparison. Analysts had estimated eps anywhere from (.14) to (.16) and the company came in with (.08). Sequentially revenues were up 8.5%, double the increase from the year before. Gross margins increased from 39.4% to 44.1% sequentially. These are impressive stats by anyone's standards. As of the end of quarter, CMTO's head-ends passed 9.8 million homes --- all capable of being connected today. They're spread out in 169 locations with four million homes in North America. Five-percent up-take per year is reasonable expectation. This quarter they added a half dozen new customers, 3 of significance they'll be announcing over the next few weeks. They have four customers of 10% or more: Philips at 23%, HSA (a Paul Allen co) at 14%, TCI at 13%, and Siemens at 10%. TCI ordered the most number of modems. Turns were 11, and will be 5 to 6 going forward; DSOs 53 versus 25 in Q4, a front-end loaded quarter. In Q1 39% came in the last month. Goal is DSOs at 60 - 70. They've received first DOCSIS modem order from Mountain Cable and also a request for 1000 DOCSIS modems from Stoffa (sic) Cable in Denmark. Cable Labs is a week or so away from completing first round of testing. CMTO's modem is built on the Broadcom chip and allows tiered service and VoIP. To their knowledge, the only company with these capabilities. They hope to be certified by end of quarter. Two more rounds to go. Entering voice beta in May and live testing in June. VoIP to public switched network in Q2, trials in Q3. Several vendors look promising. In short, this was a great quarter, the highest revenues and highest order input ever. Secondary was a success, margins were the best ever, bookings up, and international up. Q&A Q: Competitive environment? A: Most are choosing on past relationship. We're getting orders. Cisco doing best with head-ends. Good for us --- they're our partner. Q: Pricing pressures? A: We'll see some, but will try to sustain margins. It'll be tough but ASPs depend on mix of products. Fully loaded head-ends are higher priced than others. No pricing pressure on head-ends. Q: Can you maintain market share? A: Yes. Q: Re: Celestica (mfg) moving to Mexico, will it have impact this Q? A: We'll see some impact in Q2, but hoping for 10% savings over couple quarters. Q: Any impact from industry consolidation? A: Cable operators will continue to upgrade. Money will still flow. Consolidation may affect relationship between carriers and cable companies, but not vendors and cable companies. Q: Where are you seeing growth? A: TCI is not going to buy anything not DOCSIS --- at least not at the moment --- Cisco is coming on with DOCSIS (head-ends) --- we'll sell into these head-ends. Q: Regarding 3 new customers, what makes you think you've won? A: We have hard orders and have already begun shipping. They're in Europe and Far East --- large cable companies with large number of homes passed. That's all I'm at liberty to say. I have a list of questions of my own and will post once they're answered. Pat