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Advanced Fibre Communic. (AFCI) Message Board

  • LoveSonoma LoveSonoma Oct 21, 1998 1:06 PM Flag

    AFCI credibility

    After watching this stock dive for the past 3-4
    months, and carefully following developments with the
    company, it appears to me that the issue of a "credibility
    problem" really is dogging this stock. When I look back
    over the announcements of the 4th quarter last year,
    and the first quarter this year, then match that with
    the actuality of the loss of the GTE business, it's
    clear to me that the credibility of AFC management, and
    in particular, the former CEO really is
    suspect.

    I think the resignation of the CEO partially
    addressed the credibility problem. Clearly a source of the
    "hype" was removed. Also, the basic problem of the loss
    of the GTE business was partially addressed. The
    loss of the GTE account was a major management
    failure, in my opinion. Although the CEO is ultimately
    responsible, and certainly has a role in major account
    management, there are certainly others who bear an equal, if
    not greater responsibility.

    The GTE account
    was lost to Reltec, who is probably AFCs closest
    competitor in the domestic RBOC market. AFC DLC technology
    is far superior to Reltec. When compared on the
    basic merits, AFCs product offers far more bang for the
    buck. Therefore, the account was lost for other than
    technical reasons. This puts the problem that caused the
    loss of this business in the sales/marketing area.


    For large accounts, it is often up to the CEO of a
    company to "close" a sale, or massage the customer. So
    the former CEO certainly bears some portion of the
    responsibility for the loss of this account. His resignation is
    ultimately, therefore, a good sign for the investment
    community. However, it seems to me that as time has gone on,
    we have seen that the company has continuing
    difficulties penetrating the RBOC market. The competition
    hasn't changed, and the AFC product is getting better.
    So it appears that the real root of the problem that
    caused the loss of the GTE account, and is the basis for
    the continuing difficulty with the RBOCs, has not
    really been addressed.

    So, the bottom line here
    is, I believe that it would be in AFCs interests, in
    order to address the credibility problem that it has,
    to definitively demonstrate to the investment
    community that it is actively correcting the basic RBOC
    sales/marketing problem. It seems to me that the best way to do
    that is to shake up management that is directly
    responsible for sales to the RBOCs. So I'm wondering why,
    given the huge and, evidently, continuing management
    failure in this area, has the AFC board, or top
    management, not acted to replace senior management
    responsible for RBOC sales?

    It seems to me that if an
    announcement was made that a new, seasoned executive, with a
    track record of effectively managing equipment sales to
    RBOCs, was replacing current management, wouldn't this
    be a shot in the arm for the company? Wouldn't this
    demonstrate a will to increase the effort to penetrate the
    RBOCs, which has been a weak area in the
    past?

    Any thoughts?

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