Vixel Corporation (VIXL) Message Board

All serious investors must read Vixel�s 10-Q. The
link is:


http://biz.yahoo.com/e/991117/vixl.html

The section below is pasted from Vixel�s 10-Q and is
unusually disturbing (see my previous Post #1753). This is
an astounding admission from a company that intends
to become a supplier of components to the Storage
Area Network sector, where reliability is everything.


<A COMPONENT IN OUR TRANSCEIVERS HAS EXPERIENCED AN
ABNORMALLY HIGH FAILURE RATE WHICH HAS ADVERSELY AFFECTED
AND COULD IN THE FUTURE AFFECT OUR SALES.

Our
gigabit interface converter transceivers, or GBICs, and
our gigabaud link module transceivers, or GLMs,
manufactured prior to March 1999 incorporate a compact disk,
or CD, laser manufactured by a third party. GBICs
are removable and GLMs are non-removable devices that
convert optical and electrical signals. We have observed,
and some customers have confirmed, that in certain
applications our BBIC and GLM transceivers that incorporate
this CD laser have experienced an abnormally high
failure rate. Although we recorded a warranty reserve of
$3.6 million in the fourth quarter of fiscal 1998 as a
result of these problems, there is a risk that this
reserve will be inadequate to implement a remedy that is
satisfactory to our customers. In addition, we cannot assure
you that, over time, failure rates for products that
incorporate these CD lasers will not increase or that the
lasers which we began using in our GBIC transceiver
products in March 1999 will not experience problems.
Claims against us in excess of the amount of our
reserves could have a material adverse effect on our
business and financial condition.

As a result of
this problem, Sun Microsystems has reduced its
purchases of GBIC transceivers and in August 1999, we
issued to Sun Microsystems a warrant for 150,000 shares
of our common stock. In addition, if we are unable
to resolve this matter to our customers'
satisfaction, or if failure rates in transceiver products
increase, our reputation and relationships with current and
prospective customers could be damaged and adversely affect
the sales of all of our products.>

FACT: In
response to my previous posting of this excerpt (see Post
#1753), several Vixel longs have provided examples of
negative comments in the 10-Qs of other companies (see
Posts #1763, 1764, 1765, 1769), but their disingenuous
ploys to divert attention from the real issue is
transparent.

FACT: Vixel�s 10Q is uniquely ominous
because it contains the astounding admission that VIXEL�S
PRODUCTS ARE FAILURE-PRONE, VIXEL�S CUSTOMERS ARE ANGRY,
VIXEL IS TRYING TO APPEASE THEIR ANGRY CUSTOMERS WITH
REFUNDS AND WARRANTS, BUT VIXEL�S BIGGEST CUSTOMER
(SUN
MICROSYSTEMS) HAS CANCELLED ORDERS ANYWAY.

FACT: I
expect that Vixel longs will repeat their assertions
that all of this is commonplace and appears in the
10-Qs of other companies all the time. BS to that. Show
me the data. I have never read anything so
astounding in the 10-Qs of any company that I have
researched for possible investment, ever.

FACT: I
challenge the Vixel longs to post on this board the
excerpts from the 10-Qs of other companies that admit to
�abnormally high failure rates� in components shipped to
customers. I challenge the Vixel longs to post on this board
the excerpts from the 10-Qs of other companies
admitting that their angry customers have demanded millions
of dollars in refunds, millions of dollars in stock
warrants, and then cancelled future orders anyway.


FACT: Get busy Vixel longs. I predict that you won�t
find any comments that are remotely comparable to what
I have posted from Vixel�s 10-Q in the SEC filings
of any other companies. You will, of course, find
such disclosures in the SEC filings of those companies
that have already gone bankrupt.