Paul, I finally had the opportunity to listen to the conference call, and here is what I heard as to the NASDAQ listing, spoken by Steve Snyder, and the $5/share minimum bid (which I believe is a closing bid, and not an intra-day bid:
NASDAQ listing requires a minimum bid price of $5/share throughout the application process. The stock has been pretty volatile, so we want to be in a comfort zone that the minimum bid price won't break that barrier. "We may be there now", but I would rather not commit that we are going to file today. To me, the words used, and the tone of the response suggests optimism that Ancor is now in a position to do so, but it probably was going to wait and see what the post-conference call action was before deciding to go forward. I did not detect any price prediction whatsoever, just recognition of past pricing in the market and continued observation of the price moving forward.
Other things that I heard, or did not hear, on the call:
As to what can be expected from HDS, or any other OEM, Ken H. was quite explicit that customers do not want Ancor to make predictions about the anticipate contribution of a contract to Ancor revenue. Thus, we may not be in a position, for a couple of years, for Ancor to do any forecasting of revenue and profit.
It was interesting to hear that it was an Ancor test bed at the Chicago bank that led to the decision to buy, at first a couple, and later, an increase in the number of switches, in the context of a collaborative engineering effort between the Ancor reseller, HDS and the customer, and that this success contributed significantly, in the opinion of Ken H., to HDS' decision to OEM with Ancor. That chicago bank would appear to be an outstanding reference account, and the field work by Ancor must have been impressive, and something that can be replicated at other accounts.
Ken was quite clear that he does not know if HDS will choose to remain an exclusive with Ancor, since there is no language requiring exclusivity in the agreement. At the same time, while the NDA with HDS prohibited any further discussion, it appears quite clear that Ancor will be heavily involved in the HDS lab on an ongoing basis.
As to cash, I did not hear Snyder say that another financing would take place. I hear him say only that cash was burned at approximately $1 million/month, and that they were always watching, and balancing, cash burn, revenue coming in, and cash needs, and that it looked like at the end of the year that the Company most likely would "do something to bolster cash position" heading into year 2000. What that something is was not disclosed. Bank financing may be available, financing from customers may be available, etc. I do not think that this company, which what has been achieved in the last year, has to come anywhere near the type of highly-dilutive financing that took place in the past.
As to hubs, the Company said that its' current switch put pressure on managed hubs, and that next generation switches were under development.
The OEM discussion was perhaps the most interesting to my ear: We know of the public announcement of six OEMS, but shipments of switches in Q1 were made to 8-10 purchasers of switches (and I don't think there was any Boeing revenue), since the 8-10 number arose in the context of an accounting of the SAN-related revenue. One of those purchasers may have been the Japan distributor which accounted for $100,000 in revenue. That leaves 1-3 switch recipients not included within the announced OEMs. Since the revenue recognition policy does not permit "test bed" switches to be recognized as current revenue, my "soft"conclusion is that 1-3 switch purchasers are either non-OEM customers who actually purchased (such as CONSAN) or 1-3 other OEM customers, or some combination. This conclusion is bolstered by the fact that the Company smoothly, and quickly, responded to the question about the number of Tier ones "out there that have not been signed", by saying that because of NDA issues, we "would rather address that. . .in terms of announce", with "most yet to be announced."
Ken also reiterated that it would be improper to answer the question about whether shipments are being made to unannounced OEMs. While the disclosure is ambiguous, and necessarily so, if the NDAs do not permit, piecing together what was said leads me to conclude that there is at least one, and perhaps more, unannounced OEM customers. Too bad no one asked if any product shipped to CONSAN had been recorded as revenue in the quarter, or any other questions about whether non-OEM customers received shipments recorded as revenue and, if so, how many.
As to pricing, while refusing to answer questions about the number of switches, and repeatedly stating that OEM deals are consistent with OEM pricing, the reference to margins in the low 40s as life goes one suggests that there may be some discounting in the OEM world that is ongoing.
Finally, the discussion about "pipelines", just in time delivery, etc., coupled with the NDA restrictions, convinces me that we will know that Ancor is a successful company only after it happens and the news is released in the form of publicly disclosed financial statements. We will never receive enough information ahead of time to make accurate predictions about financial results for quite some time.
In sum, the call went about as I expected it would go, and I like the measured tone of confidence in which each participant spoke.
All IMHO, and based upon what I heard, and tried to piece together, whether by logic or speculation, and not necessarily what the speakers intended to convey.
Pat |
