OSXman 12/5/2012 | 3:49:41 PM
re: Occam Nabs FairPoint Business That's one way to look at it. Here is another way.

1.) Cap ex in Maine is probably going up so satisfy the regulators. Ditto NH. This PR was put out not for Occam but for the regulators so Fairpoint can show what their plans are and how good it is going to be for the people of ME, VT and NH, those good salt of the earth heavy broadband users.

2.) The PR really reads quite nicely for Occam. While Occam is the incumbent at Fairpoint, this was a competitive situation and Occam won. They have a good product.

3.) 50,000 dsl lines is probably just the start. I don't know that for sure, but that's my guess. They talk about things like 90% broadband penetration and stuff like that.

In terms of valuation, you can buy a first rate product for just $50mm. I mean, in better times for the market, how many money losing companies with a promising product sold for big mutiples of revenues? Occam has a proven product and sells for 0.5x revenues.

Yes, they have got a ways to go to breakeven. Management has proven a very high level of incompetence in terms of financial management. The internal control situation is an unmitigiated disaster.

If I were the board, I would use this contract as a means of selling the company.
Polder 12/5/2012 | 3:49:41 PM
re: Occam Nabs FairPoint Business cap ex spending of $57M over five years in Maine and $40M per year for three years in Vermont totals $51.4M per year. 50,000 DSL lines to be upgraded. No matter how you do the math, this project equates to maybe $8M at best in business per year for Occam.

The larger story at Occam is the collapse of it's stock price in 2007 from over $9 per share to around $3 per share due to the accounting issues. The company is trading for little more than their cash in the bank. Couple that with the statements from their last conference call:

1) OCNW forecasting $85-90mil in 2008, but they have no forecast for 1Q 08. So, that forecast doesn't mean much given their accounting track record.

2) OCNW says 28mil/qtr in revs to break even. That is $112mil/yr in revs. Even with their estimates, they will not get that in 2008 and OCNW would have to grow another 30% in 2009 just to break even.

Occam has a long road to travel to profitability. Fairpoint will help but I suspect the vastly underestimate the cost and complexity of developing a GPON product.
Toad680 12/5/2012 | 3:41:17 PM
re: Occam Nabs FairPoint Business Andrew Schmitt is pegging the revenue to Occam at $125 million in his analysis on Nyquist. That's pretty chunky!

Fairpoint & Occam Networks
Fairpoint Communications (FRP) plans to spend $781M over the next 5 years maintaining and upgrading the network they purchased from Verizon. Details provided by Fairpoint and fundamental metrics of the Broadband Loop Carrier business lead us to believe Occam will recognize up to $125M in revenue, of which $80M will come in the next 18-24 months, provided Fairpoint executes itGÇÖs current capex plan.

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