By: lanci on Venerdì 17 Ottobre 2003 14:09
Mah, spero di non abusare troppo dell'ospitalità altrui parlando continuamente di un titolo che forse possediamo in tre (io, dardarg e Cuneo), chiunque altro è autorizzato a postare anche un minimo segno di insofferenza che considererò come chiaro segnale di non proseguire oltre con questa saga.
Anyway, questo viene da Needham e le prime righe forse possono essere di maggior indicazione che non tutta l'analisi che poi segue:
COVD will report 3Q03 results Wednesday, October 22. As
the company has historically reported in the fifth week of earnings
season after the close, the accelerated report date could suggest
management's confidence in the company's performance, though this
timing may be coincidental.
* We believe the company is on track to meet guidance and beat
our
conservative bottom line estimates. Our estimates are for net adds,
revenues, gross margin, EBITDA and EPS of 54,394 (high end of
guidance for 50,000-55,000); $96.7MM (high end of guidance for $92-
97MM); 27.1% (up 140 bps QoQ); ($6.8MM) (low end of guidance of a
loss of $3-7 million); and
($0.11) (up only one cent QoQ).
* Our checks indicate that the company has been relatively
successful
in the migration of 23,000 lines acquired from Qwest. Most of these
lines are direct business customers with ARPU of $120, which boosts
the quarter's performance and could set the state for strong
revenues. We model 16,500 of these subscribers migrate to COVD (60%
direct business and 40% direct consumer), at the mid-point of
management's guided range.
* Using line-splitting, AT&T launched DSL/UNE-P bundling with
COVD in
New York in July. Considering AT&T launched four more states for
bundling with COVD in September (New Jersey, Maryland, Massachusetts
and Virginia) and added several thousand subscribers in New York
just in July, we believe AT&T could deliver 20,000+ consumer
wholesale net adds in the period.
* Together, we estimate the Qwest migration and AT&T bundling
initiative could put COVD in the 30,000-40,000 net add range, or
roughly 2/3 of the quarter's guided performance. Despite potential
confusion surrounding the final Triennial Review order, which was
eventually delivered on August 21, other channel partners should be
able to add 15,000-25,000 more lines bringing COVD within its
guidance range. Note that without line-splitting, consumer
wholesale added over 50,000 lines in 2Q03, suggesting to us that
traction in other business segments, including line-sharing and
independent loop-based consumer products, could allow COVD to
surpass our views.
* Looking ahead, we expect management to guide for
accelerating net
add growth in 4Q03:
1. AT&T is now in five states, with eight more states
to be
launched in 4Q03.
2. Our checks confirm MCI has gone live in roughly 30
states
including D.C. as of October (phase II of its DSL rollout), with a
nationwide media blitz (i.e., Danny Glover/"THE NEIGHBORHOOD") to
come this winter. We understand MCI is now deployed across a total
of 1,100 central offices (COs) using its own 600 CO footprint (i.e.,
Rhythms) supplemented by COVD.
3. ISP channel partners including AOL and EarthLink
have an
additional one-year runway for line-sharing from the FCC, allowing
COVD to continue serving them with profitable line-sharing based
products. Further, our checks indicate that COVD is close to
securing commercial line-sharing agreements through 2006 with the
Bells at a $5-6 monthly UNE rate, which would extend the ISP channel
opportunity indefinitely and provide upside to our views.
* We predict strong net add growth this winter as follows: If
1) AT&T
is able to add 1,000 lines per state per month; 2) MCI is able to
add 1,000 lines per state per month with ½ of those lines
provisioned internally and ½ provisioned through COVD; 3) ISP
channel partners can deliver 50,000 net adds similar to the
company's 2Q03 run rate; and 4) direct business and indirect
business can simply stay flat QoQ (with the NAS/DSL.net migration
issues out of the way, we think indirect business should stabilize;
meanwhile direct business had strong 2Q03 net adds of 12,910 making
a flat 4Q03 assumption in direct business conservative); we estimate
COVD could sell 110,000 lines in 4Q03. Even if only 2/3 of these
lines get provisioned, using our assumptions, COVD would report
73,000-74,000 net adds in 4Q03. This level would mark acceleration
to COVD's net add run rate for the past several quarters (see
attached model for trend line). We believe AT&T and MCI are getting
aggressive on DSL bundling in certain states, with price points in
the $30-35 range including rebates. Further, third-party ISPs have
no logical alternative for broadband migration with a wholesale
partner barring regulation of the cable plant and reregulation of
RBOC DSL. As the last independent nationwide DLEC, COVD appears well
positioned for growth from IXC, CLEC and ISP partners, which we
believe would prefer to use COVD rather than the Bells for DSL under
almost any scenario. Net/net: We believe our math supports up to
500,000-600,000 net adds per year by 2005, when AT&T, MCI and Sprint
will be marketing DSL/UNE-P bundles nationwide and numerous other
channel partners, including CLECs and ISPs, will have geared up for
growth.
* Put another way, with AT&T adding 120,000 UNE-P subscribers
per
month and recently expanding to three dozen states, MCI at similar
run rate levels and marketing "THE NEIGHBORHOOD" nationwide, and
Sprint recently launching UNE-P bundles in its non-ILEC regions and
accelerating growth, the "Big Three" alone could drive 400,000-
500,000 annual net adds for COVD assuming a 10% take rate on the DSL
portion of the bundle on new and existing UNE-P subscribers
