Calix, Inc. (CALX) Deutsche Bank Technology Conference September 11, 2012; 12:30 pm ET Executives Michael Ashby - Chief Financial Officer Dave Allen - Director of Investor Relations Analysts Presentation Unidentified Participant
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We are the leader in advanced broadband Access and we have the largest market share in North America in fiber to the home and are the largest market share in both the 2-2 and 2-3 space in North America.Over 1,000 customers, including 18 of the 20 largest US Ilex. We have shipped over 70,000, 75,000 systems, 15 million ports and we are financially a strong country, no debt and even though our revenues have been down in the last couple of quarters, we are able to generate cash each quarter and have no accessing the problems on them as far as the company is concerned. So our focus is on Access as I mentioned. As you can see with the shape and technology ahead, the first is commerce is going completely global as everybody knows. Second is that communications are becoming mobile and personal and that has been drive of course by the iPad, iPhones, Tablets, all those smaller devices, which are making everything become mobile. The third is that information is becoming digital and as you probably know, only about 10% of the world’s information today is digitized, but that is rapidly increasing and will continue to increase. And finally the culture is becoming virtual. So the culture is virtual in every aspect, using things like FaceTime, Skype and all sorts of different meetings, which have taken over using video. So all of this has become what we call an old video world. You can’t to a website now which doesn’t have video on it, which doesn’t have a video clip. Everything that you do now demands broadband Access and demands video. In addition to that, there are a number of things that are impacting the service providers themselves, our customers. The first one is regulatory; that is a trailing indicator. Regulator has always been around and continues to be around. The changing of the present managers us actually affecting us. At the moment our regional carriers are somewhat effected by changes that have taken place in what’s called the USF /ICC reform and so the industry is regulated. We’re becoming less served as time goes on. And the competition however is intensifying. The competition is intensifying not just within the service providers but from the cable companies, of course from the wireless and from different types of service providers that are coming up in the world. So competition is strongly in this business for our customers.
Most important is the fact that the consumers is now in power and that was a big change that’s happened over the last few years and as we look at this new business model, your going to see that it’s the consumer in fact that is driving the business model.Then the past networks were driven by voice. So the service providers such as AT&T or Verizon is going to pay by its network and then they sold services. But with the networks facing operation, they felt they told you what strategy you could buy and you bought those services and you are happy to pay for them. That is changed considerably in the new broadband business model. I mean broadband business model is a much lower margin model, it is a leaner model and it is no longer network facing. It is in fact customer facing. It’s driven by the subscriber, so that triangle is being inverted, whereas the cost used to go into primarily implanting engineering and operations demonstration, those have now had to be reduced considerably and more of the cost reduced considerably and more of the cost is going into customer service and marketing, because it is being driven by a subscriber. The subscriber is demanding the services and they are no longer just buying services, they are demanding services, in which they want to use Netflix, they want to download videos and they require the services and the service provider provides those services to them. Read the rest of this transcript for free on seekingalpha.com