Pete Baldwin 12/5/2012 | 3:38:42 AM
re: Ikanos Catches VDSL Blues Analysts weren't happy with all this, of course, and a couple even asked (more like demanded) whether Ikanos shouldn't put the brakes on forward-looking development and concentrate on reining in opex now.

Not sure I agree with that. From a bean-counting, public-company standopoint, it might be the right thing to do, but Ikanos seems to be poised to grab serious chunks of territory in broadband. Wouldn't a few tough quarters be worth it if the company has a shot at being a powerhouse?
paolo.franzoi 12/5/2012 | 3:38:40 AM
re: Ikanos Catches VDSL Blues

The problem is....powerhouse in what?

Remember Centillium? They have been comodotized and the same thing will happen with Ikanos. They already have Broadcom and Infineon to compete with. As prices drop, they need to get on another bandwagon.

Problem is what is this? Centillium tried to take their DSP technology over to the VoIP market - apparently unsuccessfully. What the analysts realize is that Ikanos is probably a nice little group for say TI to buy to be in the VDSL game. But there is not enough here to justify a premium for parts or a stand-alone company.

So, if I were an analyst - I would say purty up that ole piggy and sell 'er off before you become Centillium.

paolo.franzoi 12/5/2012 | 3:38:38 AM
re: Ikanos Catches VDSL Blues
All of those solutions are shipping. The 5th Gen chipset from Ikanos has bugs and they are doing a metal spin to fix it. Thus, their manufacturing problem - its broke.

Ikanos is dead right now. Asia is moving from VDSL already to FTTH - see the drop in Japan as FTTH installs grow. That is the problem there is no follow on for companies like this.

OSXman 12/5/2012 | 3:38:38 AM
re: Ikanos Catches VDSL Blues Craig,

What's your opinion on the potential of VDSL?

After adjusting for IKAN's cash position, you are buying the number 1 VDSL company for under $100mm. If VDSL turns out to see significant deployments, this will be an inordinately cheap price.

I understand that VDSL will be commoditized, but from what I can tell there are nowhere near the same number of players as in the ADSL market. Remember, the ADSL market came on the heels of massive investment in everything telecom. VDSL comes in the wake of a depression that has taken its toll on spending.

As for competitive solutions, I hear that BRCM is nowhere with their solution and that CNXT has some technical issues. Any one in a position to comment?
OSXman 12/5/2012 | 3:38:36 AM
re: Ikanos Catches VDSL Blues OK... metal fix is metal fix. If they do it right, hopefully then it won't be broke.

Don't confuse the lack of revenues to Japan with end market demand there. I am not exactly sure what the issue in Japan is, but it sounded like it may be an inventory correction. Of course, this raises issues about management and whether they were consciously stuffing the channel or just oblivious. Neither answer is particularly encouraging.

Ikanos may be "dead" right now. That's okay because the shares are cheap enough. The important investment question is what will the company look like in 6-9 months? If revenues are back to $40mm, the stock will be a lot higher.
paolo.franzoi 12/5/2012 | 3:38:35 AM
re: Ikanos Catches VDSL Blues

NTT is installing FTTH at a rate of 1M homes per year. That is what is wrong. The original deployments were based on VDSL up the risers, but that has issues with the Japanese Government for unbundling. So, NTT is in a mass deployment mode of EPON. DSL installations in Japan have slowed way down.

Revenues will go down as price per line goes down. Ikanos has peaked and it is now on the path to oblivion unless they find a new non-DSL market to enter.

ragho 12/5/2012 | 3:38:33 AM
re: Ikanos Catches VDSL Blues

I love your optimism with Ikanos. Do you work for them?

I do agree that the market for VDSL is still there and will grow, but not in the APAC region. The suburban deployments will largely be FTTX as brookseven suggests. Ikanos has a lot more turf to play in rural America, Brazil, France and Germany.

A metal fix is no metal fix, it's not a pancake flip. Problems at this stage in operations affect large volume production, yield, and most importantly product quality. This is a major hiccup: I've seen this exact issue wipe out supplier relationships entirely.

Ikanos has been at the forefront with VDSL, I definitely give them credit. At this stage, it's a strategic business execution not just an engineering marvel that they need. Hopefully they can put that together and sail smoothly.

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