From the WTT CEO in their earnings release this evening:
While spending softened in 2015, we anticipate increased spending by the major carriers in 2016 as the demand for increased broadband drives the need for improved signal coverage and capacity."
Sounds like nice timing to release Clearlink!
All the signs are there for growth, however, the market looks to take a little pause here. I still think it settles in around $1.55-$1.60 before the next earnings report. On a bright note, the mild weather so far has to be a positive.
The fact that Northland has not issued an update post earnings, suggests to me a quarter that comes in around expectations, which will represent a 50% increase in revenue over Q3 from last year. The guidance going forward around Clearlink will be key. If indeed this additional market increases Westell's total available market from $100 million to over $1 billion, any product uptake in parallel to UDIT, should bring significant growth over the next xt two years. Based on the return of Carrier spending, the existing portfolio without Clearlink and without significant ISM growth should get a revenue run rate of $100 M. With Any new ISM momentum and a successful launch of Clearlink, I would think that we should see quite a bit of revenue upside in calendar 2016
I saw that as well. The more that I dig into it, the more I learn how woefully under resourced this company was under Gilbert. There was virtually no sales infrastructure. How in the world did they expect sales from the carriers without anyone in place to sell??? I am pleased that they are trying to beef up the ISM sales with the addition AND focus that a segment sales director will bring
Oh really...... So just what did he say??
I want to say a few words about our outlook. As you know, we entered 2Q with a strong backlog and we began the third quarter with a backlog that’s equally strong. However, I must point out, that the third quarter is historically a seasonally difficult quarter including adjustments related to seasonal customer deployments in budget cycles.
In addition, looking at the calendar, there are approximately 15 fewer selling days in the third quarter compared to the second quarter due to the Thanksgiving and Christmas holidays. For these reasons, we anticipate that equaling our 2Q revenue and 3Q would represent a very strong performance in the quarter ahead. There are no carryover customer factors at this time that causes the change of favorable view of fiscal year '16 as a whole.
Given the fact that Q 3 sales in last fiscal year were $14 million, I would say that it looks very promising that there will be significant year over year growth. If that is a warning then I can't wait to see what a really good growth quarter looks like.
It is very nice to see some bullish movement confirmed on higher volume. I go back to the new DAS market to be served by Clearlink. According to management, this market is 10X of the current DAS market that the company plays in. In theory, if a relative market share compared to UDIT and passives remained constant, one would expect a potential for 10Xin sales as well. If WSTL does $40-$45 in DAS today, then under optimum conditions we might expect $400-$450M per year. Even if the company only comes in at 1/10 of that number relative to its currently served market, then an additional $40-$45 MM per year is not a stretch. This would get the revenues to that $140-$150 range. As we get closer to launch, it will be critical for the management team to articulate the real market and initial expectations for the product ramp.
Q3 outlook begins with a backlog equal to what they had entering into Q2, however fewer selling days and seasonality would require a "very strong performance" to equal Q2 revenues. It was good to see ISM sales reach their highest levels since Dec 2013. With Clearlink expected to begin revenue shipments in fiscal Q4(quarter ending in March) I would expect an upside to the $25M per quarter. If the new area of the DAS market that Clearlink serves is "significantly larger" than the currently served DAS market, I would think that once we see traction post launch, we should also see significant upside. Let' s say that the IBW has a $11 M/quarter run rate today. If this other market is significantly larger, one would expect that similar traction with Clearlink would at least buy you another $11-$15M/ qtr in revenue. So it is entirely possible for the company to exit calendar 2016 with a $35-$40M / quarter run rate. If this happens, it is entirely possible to enter calendar 2017 earning $0.25-$0.30/share.
I like the fact that the company will be more active telling the story to the investment community by attending more investment conferences and by courting new analysts. I appreciate that they called this out. If they do execute and hit the numbers that I see river above, it is entirely possible that the stock does hit $5-$6/share in the next 18 months. Time will tell, but the new management is definitely more engaged.
AA few observations:
There was no mention of next quarter order backlog.
No mention of Carrier spending-- so we will hear more tomorrow on that
Any color on Clearlink expectations and potential launch date
What is driving IMS--- is there some upside with the coming year
When will Opex wind down? I would have expected a near break even GAAP with $25.5
While I clearly understand what such a low short position says about sentiment, I would rather actually see a huge short interest so that we might benefit from a massive squeeze in the event of good earnings
From the Verizon earnings press release:
Wireless capital investment totaled $2.9 billion in third-quarter 2015 and $8.5 billion year to date, up 8.4 percent from a year ago, as Verizon continues to optimize its network. Densification plans, which include deployment of small cells, DAS (distributed antenna system) nodes and in-building solutions, are improving capacity in the near-term as Verizon prepositions its network for 5G
I noticed the same pattern shortly before/after the last quarter. There were a bunch of new posters and hype that lasted about three weeks. As long as the stock keeps going north, right?
Adtran saw 35% YoY growth with US carriers, Tier 1 and Tier 2. They also expect to see solid growth in the US for 2016.
I guess that we will need to see what the other equipment vendors have to say. It sure would be nice to break out of this long US slump in spending. If the trend proves to be verified, 2016 should be a very good year for Westell.
Well said. I worked several years in the molecular diagnostics space in both sales and marketing. A few months ago, I watched in disbelief when several of the analysts began to address what they believed was the total available market (TAM). Anyone who has done real marketing knows that the TAM does not correlate to the actual market. Many people underestimate the stranglehold that the "professional" component has on behavior (reimbursement) . If you are a doctor that makes a living on doing colonoscopies, are you really going to recommend a test that replaces your income? The doctor controls the testing regimine, not industry. Marketing folks, and in this case Wallstreet, often overestimate the TRUE available market. I believe you will see this fact playout over time and be reflected in the actual revenue ramp.
I take it that you are not a fan of Grunewald??
I think that he has done a good job so far. Gilbert had allowed the sales team to dwindle down to a virtual skeleton. It's kind of hard to sell products without people in front of the customer. Do you think?
The rating references a win for OSP at a tier 1 supplier and OSP upside in other areas. Stabilized spending at AT&T. Raising revenue guidance for next fiscal year back over $100 M. Revenue guidance in Q3(Dec.) of approximately $21 up from $14 and Clear link sales beginning in Q4.in light of the shortfalls with previous management, this report does not get issued without heavy discussions with the new management team signalling renewed growth.
I don't care about the current RSU/option position. Does anyone know what the percent ownership that Goodrich had with CSI. If he held a 25% stake, then he made a nice $10 mil on the deal. My guess is that as founder, he did very well, certainly much better than any potential payoff by sticking around for another few years.
Since he was the founder of CSI, does anyone know what percent of the company he owned? If he made a bundle through the acquisition, he may simply just be calling it a day. The verbiage in the press release and the consulting arrangement point to a much more muted reason for his departure than his performance or the company's future.
Ah, always late on a Friday to mitigate the impact. So now, either IBW is heading south.... Or.....Goodrich's lockup from the acquisition finally ran its course. My guess is the later based on the overt acknowledgement of the consulting arrangement and based on Goodrich providing a quote for the press release.
Never a dull moment with management here lately.