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FY 2011 financial estimates

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Given that 1Q revenue, per guidance, is expected to be $39 million (the midpoint of the $37.5-$41 range) it looks like the best guess right now (for the full year) is a revenue growth rate of 5% plus or minus a couple of points. And that may be too optimistic. Growth of 10% for the fiscal year, if the 1Q comes in as expected, would imply revenue of $48 million for the next 3 quarters. That has to be considered very unlikely at this point. If the 2Q comes in at $45 million that would mean the 3&4Q would have to be $50 million to hit a 10% growth for the year. I guess that might be doable but I don't think we will find many people who would count on that.

(Last years, FY 2010, total revenue was $166 million. 10% growth would imply $183 million for FY 2011. A growth of 5% would show revenue for total year FY 2011 of $174 million.)

Posted by dlog - 14 years ago | Updated 14 years ago

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Yesterday I checked the covenants of the convertible debt outstanding. VTSS can call the bonds, ie force conversion, any time after October 2011 (I did not get the exact date but it is within a couple of weeks of there) if the stock is trading at or above $5.85 per share for 20 of the 30 trading sessions immediately preceeding the day before the date of the call.
If the conversion were to happen it would add to the number of shares outstanding, they would increase to about 35 million, but importantly would completely remove the interest payment (expense). That alone would have a tremendous impact on the EPS to say nothing about how it would clean up the balance sheet by removing the debt and adding to the stockholders equity account. This would be very positive.

Posted by dlog - 14 years ago | Updated 14 years ago

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Does the estimate take into account the statement that was made that they were ahead for last quarter 2 weeks before the quarter ended?

Posted by Mark - 14 years ago

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Mark: the answer is no. When the december quarter is reported and guidance given for Mar we will have a much better estimate. But right now I would be thrilled with 10% growth for the year and I think if it became credible the stock would be much higher than it is today ($5.25)

Posted by dlog - 14 years ago

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Here's something positive: carrier ethernet is expected to grow 39% per year for next 5 years in India. Gardner said he just got back from there. Anyone know our current sales in India?

http://www.cxotoday.com/story/ethernet-to-grow-at-39-cagr-in-next-5-years/

Posted by thereinman - 14 years ago

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An item to be considered is how Vitesse does compared to other firms where any potential growth is concerned. CRG is smart to highlight the sell thru method. While some/most of us in BCL (bitter clinger land) note the 'why' Vitesse accounts this way it is of less concern to new investors ....and the 'we don't count it till the end customer gets it' is a more conservative method than used by others.

Reinman, thanks for article. Is there an idea of what the current dollar figure is to base future growth on?

Posted by altrfan - 14 years ago | Updated 14 years ago

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Mark: the comment at Needham about being ahead with 2 weeks left to go in the quarter was about design wins, not revenue. And as our fearless leader has mentioned time and time again, don't draw any conclusions between the two.

Dlog: your comments about growth y/y don't take into account that the legacy revenue from storage and other non-core products is continuing to shrivel up to nothing since that is not a focus of any R&D. So maybe the better comparison is growth in their core carrier and enterprise ethernet markets where they are actually investing precious R&D dollars (with a little thrown in for IP patent sales).

Posted by sharpinvestments - 14 years ago

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Altr – remember Gardner just claimed dramatically better cost, power and size for Vitesse’s new products so one would think that they can grow faster than competitors.

Sales to Asia were 44% of total last year but it looks like sales to India are just starting. From 10-K: “We have been in China for nearly a decade, and now have several of our largest customers in that region. This year (2010) we invested in a direct sales organization in India, where we already have multiple Tier 1 customers developing systems using our components.” With a local sales force in place and with their expanded India design center focused on the carrier market they seem to be pretty well positioned – but this looks like another future growth prospect rather than a current one.

Posted by thereinman - 14 years ago

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you have to put dlog's revenue projections for 2011 together with crg's statement that 2011 revenue will contain only 5% contribution from the 2010 designs - - -most coming likely in the Q4 as he said many of the 2010 designs came later in 2010 so any sales would be to the Enterprise segment that he says has a 12-18 month design to build cycle. and with our "sell thru model", they need to book shipments before Oct. 31, 2011 or they don't count in the 5%. crg was not as clear when i asked how much revenue we would lose from the 95% of older products which must be declining in sales - -if it is one for one - packet ethernet chips sold as Sonet chips are phased out, then revs might be replaced by the new designs.

now, couple crg's estimate of 20% of revenue coming from the 30 new products in 2012 with the new customers in India and others and the projected revenue growth rate for 2012 - -you get a chance in 2012 to beat $50MM per quarter.

using the equations: (.95 X 2010 revs + .05 X 2010 revs) X projected rev growth for 2011 (use 1.10 for 10% or any other)

and for 2012: (.8 X 2011 revs + .20 X 2011 revs) X projected rev growth growth for 2012 (use 1.18 to 1.20 for 18-20% or any other)

so that is the story crg is pitching - and i told him it was not as clear as a financial model (prolly on purpose) -- with clean books, conservative design win and revenue posting, a corporation free of civil and criminal filings who doesn't have to pay legal fees of the defendants, new products, energy save chart over brand B and brand M (Marvell btw), more breadboard evaluations and design wins than in previous years - - new markets that have projected double digit growth rates thru 2014.

Posted by daWiley1 - 14 years ago

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So Vitesse thinks that its new Tiger "chips are starting to encroach on the network processor territory occupied by companies such as EZchip". Maybe someday we'll approach a P/S of 14 like EZCH has. That would put us over $90.

Here's Light Reading's view on Vitesse's latest product family:

http://www.lightreading.com/document.asp?doc_id=203529&

Posted by thereinman - 14 years ago

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I will move some MSPD/Vitesse comments here:

MSPD is on the same fiscal year as Vitesse. Reinman noted MSPD product revenue of ~$164 million ($41mil/quarter) in 2010. Based on the 1st two quarters of fiscal 2011, MSPD is on a pace well below the previous year....in the $38-$39 range. So MSPD will need a strong 2nd half to just reach the 2010 level.

It now seems clear that a fair portion of MSPD 'growth' in 2010 was simply shipments to distributors based on 'order patterns' as opposed to actual orders. Vitesse looks better by comparison here as time goes on. In addition, the higher book to bill MSPD is now talking about could be considered a little suspect: are these actual orders??....or distribs just updating their inventories. CRG needs to continue to highlight this as Vitesse revenue is actual revenue.

I haven't listened to the MSPD call yet to get specific %'s, but MSPD still has a decent WAN (non core) biz that is going away, meaning that the new product revenue base MSPD has to build revenue growth is smaller than the current total revenue. As Vitesse has already undergone the decline in non core biz this is another plus for Vitesse when comparing the two companies.

Posted by altrfan - 14 years ago | Updated 14 years ago

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