Original Source: FD (FAIR DISCLOSURE) WIRE
. Robert Weiskopf, Aware, Inc., CFO, VP . Michael Tzannes, Aware, Inc., CEO
The company announced 1Q05 revenue of $4.2m, for a $0.01 loss per share. 2Q05 revenue guidance was $3-5m. Q&A Focus: royalty income, new DSL technologies.
A. Key Data From Call 1. 1Q05 revenue = $4.2m. 2. 1Q05 loss per share = $0.01. 3. 1Q05 expenses = $4.8m. 4. 1Q05 DSOs = 71 days.
5. Cash and short-term investments at end March = $38.8m. 6. 2Q05 revenue guidance = $3-5m.
S1. 1Q05 Financial Review (R.W.) 1. 1Q05 Results: 1. 1Q05 revenue was $4.2m. 2. 1Q05 EPS was a loss of $0.01 per share. 1. Compares to revenue of $3.6m and EPS loss of $0.05 in 1Q04. 3. Product revenue was $1m, vs. $1.5m in 4Q04 and $1.2m in 1Q04. 1. Consists of software sales for biometrics and medical imaging and hardware sales for ADSL test and diagnostics. 4. Contract revenue was $2.2m vs. $2m in 4Q04 and $1.3m in 1Q04. 1. Up primarily due to increase in license fees and engineering services from StratiPHY2+ products. 5. Royalty revenue was $1.1m, flat with 4Q04 and 1Q04.
6. Analog Devices and Infineon were top customers. 7. 1Q05 spending was $4.8m, vs. $4.3m in 4Q04 and $4.9m in 1Q04. 1. Sequential increase predominantly due to higher engineering and product development costs. 2. 4Q04 G&A costs were decreased by reduction in the provision
for bad debts. 3. Lower spending vs. 1Q04 primarily due to decreased cost of sales on lower hardware product sales and lower depreciation cost. 8. Interest income was $217,000, at a 2.3% annualized interest rate. 2. Balance Sheet: 1. Cash and short-term investments were $38.8m at end March. 2. Receivables were $3.3m at end 1Q05. 1. DSOs were 71 days. 3. Inventory levels were minimal. 4. Co. has no debt. 5. At March 31, co. had 104 FTEs. 1. 74 were engineers. 6. Approx. 23m shares of capital stock outstanding at end 1Q05.
S2. Operational Highlights (M.T.) 1. Milestones: 1. Signed another new StratiPHY2+ customer in licensing products. 1. Blue chip semiconductor co. that decided to enter ADSL market through licensing deal with AWRE. 2. Customer list is now six: Analog Devices, Thompson, Infineon, Atnell (phonetic) and two as-yet-unannounced customers.
3. StratiPHY2+ platform: 1. Has been a successful product.
2. Customers can develop chipsets to meet interoperability and
performance requirements without the need for large internal development and support teams. 3. First platform to demonstrate ADSL2+ data rates and interoperability with Alcatel. 4. First to demonstrate bonded ADSL2+ (two telephone lines that deliver 45 megabits per second of data). 5. Analog Devices uses StratiPHY2+ in AD6487 ADSL2+ chip and Fusiv AT communications processors. 6. DSL engine in Infineon's Amazon CPE chipset. 4. Completed new StratiPHY3 product.
1. High-performance silicon level technology platform supporting all ADSL, ADSL2, ADSL2+ and VDSL standards. 2. StratiPHY3 chip has been fabricated at TSMC. 3. Supports numerous operational modes and will deliver value to fiber-to-the-node and fiber-to-the-curb infrastructures. 4. Will support all modes of operation on single silicon platform, requiring only different software loads for operation.
5. Co. believes product is hitting market at right time. 1. Expect new VDSL2 standard will be consented at International Telecommunications Union meeting in Geneva later this month. 6. Interest in the standard has peaked in last several quarters due to emergence of new network architectures involving deep fiber feeds and coming of age of IP video and IPTV technologies and services. 7. New standard likely to propel new wave of DSL growth. 8. ADSL2+ and VDSL2, combined with IP video and IPTV, enable triple play services over phone lines. 5. Increased royalties from ADSL2+ chipset sales by customers. 1. Analog Devices and Infineon have 2+ chipsets in the market and sold a larger amount this quarter vs. last quarter.
2. Majority of revenue remains ADSL, but movement to ADSL2+ is
steady. 3. By end of 2006, nearly all deployments of ADSL will involve ADSL2+ technology. 1. Transition happening quickly, and co. expects it will benefit with its customers. 4. Infonetics Research updated DSL forecasts, predicting very rapid growth, especially on the CPE side. 1. CO ports to grow from 58m in 2004 to 61m in 2005, 62m in 2006, 63m in 2007, and 65m in 2008. 2. VDSL ports expected to take an increasing percentage of CO overall numbers, reaching about 40% in 2008. 3. Customer premise units forecast to grow from about 36m in 2004 to over 78m in 2005, 93m in 2006, 109m in 2007, and 120m in 2008. 4. VDSL penetration will only reach about 4% of customer premise equipment units in …