re: Adtran & Tellabs: A Tale of Two Access Stories"Calix has really really low margins - if you look at hte product it is overdesigned for a NGDLC."
But they have over 200 wins, and most of them look new, which means they have lots of sales coming up. Are you saying that their margins are so low that they can't make money no matter how high their sales are?
re: Adtran & Tellabs: A Tale of Two Access Stories"But they have over 200 wins, and most of them look new, which means they have lots of sales coming up. Are you saying that their margins are so low that they can't make money no matter how high their sales are?"
seven: "They just had to raise money - you figure it out...."
I don't see anything inconsistent. Usually a company needs money most when lots of sales are in the works.
I'm willing to accept that they may be doing poorly, if someone can explain how they are doing poorly when they seem to own the market they are going after. Is it true that they've severely underpriced their product and can never be successful? That would be quite a blunder.
re: Adtran & Tellabs: A Tale of Two Access Stories Calix sales are actually down year over year....
They have terrible margins as the product was designed for the large line size space and they are in the small line size space.
It is not that they underpriced their product. AFC set the cost point for this market and Calix has to meet it. AFC won because it was cheaper than the competition. Calix started as a company to replace Litespan in the RBOCs. So, the product is not optimized for the IOC and T2 space. A 2000 line optimized for the 24 - 96 line space.
re: Adtran & Tellabs: A Tale of Two Access Stories"Are you saying that their margins are so low that they can't make money no matter how high their sales are?"
Isn't that one of the reasons Tellabs pulled out of Verizon GPON?
re: Adtran & Tellabs: A Tale of Two Access Stories I thought I would say a couple of things here again. First, I think Adtran is a fine company and runs a good business. I think people (Rich Church is a classic example) misinterpret their business. They are a fast following, niche player.
What I have seen them do (many times) is find holes in the market and design specific solutions around that hole. They try to build boxes not systems and do so with good cost models and good quality.
These product cycles come and go at regular intervals and they run many different products in different parts of their life cycles. Based on this, they have run a business of about $400M of with good profit over 10 years or so. They have had business in the Enterprise, Tier 1 Carriers Domestically, International Carriers, and Tier2 and Tier 3 Carriers.
But it is a business that has a relatively slow overall growth rate as the mix shifts from product area to product area. Given their niche and follower focus, they are unlikely to break out from the slow growth mode. They can occasionally burst, but that product wave crashes and the next one comes along.
There is NOTHING wrong with this business model. It is elegant, diversified, relatively low risk and sustainable. However, they are not taking over any large markets soon.
re: Adtran & Tellabs: A Tale of Two Access StoriesIn reality it is way too early to call the long term winner. Tellabs Access (former AFC + Marconi) was $600-700M not too long ago when BPON and FTTC were hitting on all gears. , Adtrans biggest number around $500M total still includes enterprise products. Also Adtran, ironically just like Tellabs, likely gets most of it's profit from declining sales of TDM T1 services (HDSL varieties in this case). Whether the TA 5000 will truly ramp and be profitable, and how quickly Tellabs shrinks and in parallel succeeds or fails on the 1150 will ultimately tell this story.
From the story: "Adtran did quite well compared with last year, while Tellabs saw its access business shrink."
Factual, yes. But two different stories that don't have as much to do with one another as we're making it seem?
Point taken.
ph