EXHIBIT 99.2
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Final Transcript
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[GRAPHIC OMITTED]
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CCBN STREETEVENTS CONFERENCE CALL TRANSCRIPT
SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
EVENT DATE/TIME: NOV. 11. 2003 / 4:30PM ET
EVENT DURATION: 31 MIN
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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CORPORATE PARTICIPANTS
ANDREW KRAMER
Sycamore Networks, Inc. - Director of Investor Relations
DANIEL SMITH
Sycamore Networks, Inc. - President and Chief Executive
FRANCES JEWELS
Sycamore Networks, Inc. - CFO
CONFERENCE CALL PARTICIPANTS
DAVID WAI
RBC Capital Markets - Analyst
MIKE DEMICHELE
Thomas Weisel Partners - Analyst
MIKE GENOVESE
Salomon Smith Barney - Analyst
SIMON LEOPOLD
Merrill Lynch & Co. - Analyst
CHET WHITE
Merriman Curhan Ford & Co. - Analyst
TODD KOFFMAN
Raymond James & Co. - Analyst
MARCUS KUPFERSCHMIDT
Lehman Brothers - Analyst
PAUL SILVERSTEIN
Needham & Company - Analyst
PRESENTATION
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OPERATOR
Ladies and gentlemen, thank you for standing by. Welcome to the Sycamore
Networks first quarter fiscal 2004 financial results conference call. During
the presentation all participants will be in a listen-only mode. Afterwards we
will conduct a question and answer session. At that time if you have a
question, please press the one followed by the four on your telephone. As a
reminder, this conference is being recorded Tuesday, November 11th, 2003.
I would now like to turn the conference over to Mr. Andrew Kramer, Director of
Investor Relations with Sycamore Networks. Please go ahead sir.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you operator. Good afternoon, ladies and gentlemen, and thank you all
for joining us today. With me today are Dan Smith, Sycamore's President and
Chief Executive Officer and Frances Jewels, our Chief Financial Officer. The
purpose of this call is to discuss Sycamore's first quarter fiscal 2004
financial results and related business matters.
Today's press release was distributed after the market close at approximately
4pm via Business Wire and First Call. Throughout this conference call, we will
be referencing both GAAP and pro forma financial results. We have provided
information related to both our GAAP and pro forma financial results along with
a reconciliation table between our GAAP and pro forma financial statements in
our press release. Additionally please note we have provided GAAP
reconciliation information on our website located at www.sycamorenet.com within
the Investor Relations section.
Before we get started I would like to note the following: Except for historical
information, we wish to caution you that certain matters discussed today
constitute forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those stated or implied
in forward-looking statements due to a number of factors which are identified
in today's press release and discussed in detail in the Company's most recently
filed reports on Form 10-K and Form 10-Q and other reports filed by the Company
from time to time with the Securities and Exchange Commission. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future results or
otherwise.
And with that said, I will now turn the call over to Dan Smith.
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publication may be reproduced or transmitted in any form or by any means
without the prior written consent of CCBN.com, Inc.
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Thank you, Andy. Good afternoon everyone, and thank you for joining us. This
afternoon Sycamore reported first quarter revenue of $8.4 million, a GAAP net
loss of $12.2 million, or a GAAP net loss per share of 5 cents, and a pro forma
net loss of $10.7 million, or a pro forma loss per share of 4 cents. Fran will
provide more details on the financial results later on on the call.
During the first quarter, we continued to balance strategic investment in the
business with our efforts to carefully manage our expenses and preserve our
cash position. Given the current environment and ongoing capital expenditure
constraints, we continue to maintain focus on three critical areas of the
business, disciplined financial management, technology innovation and expanding
customer relationships. I'd like to provide an update on each of these areas,
and then briefly review the competitive landscape.
First, a key area of focus for Sycamore is disciplined financial management. We
continue to place emphasis on controlling expenses and preserving cash. Our
first quarter performance demonstrates positive results on these fronts. Moving
forward, we plan to make careful, strategic investments that will enable us to
advance our technology and broaden our customer base as we continue to
participate in trials and evaluations. As you know, our participation in such
evaluations and trials may, in the short run, increase our inventory and cash
burn.
In terms of technology innovation, we continue to invest R&D resources to
deliver intelligent optical switching solutions, with the capabilities that
address the needs of our existing and prospective customers: Specifically
during the first quarter we advanced our products in three dimensions: first,
by adding new features and functionality to better support traditional optical
networks; second, by enhancing our network protection and restoration schemes;
and third, by implementing emerging inter-operability standards for optical
networks.
During the past quarter, we added new features and functionality that better
support traditional optical networks. These additional capabilities further
eased the introduction of our optical switching products into existing network
infrastructures and complement our broad support of traditional ring-based
networking capabilities. As a result, customers benefit by significantly
improving network efficiencies while at the same time leveraging their existing
network assets. Furthermore, we continued to demonstrate the ability of our
switches to interoperate with a number of leading add/drop multiplexer devices
in customer testing environments.
Another area of Sycamore's continued technology investment and differentiation
is the breadth of our protection and restoration schemes. Specifically, our
switches deliver carrier class restoration for ring configurations and support
an array of next generation mesh protection schemes. Just as critical, we can
provide customers with both of these options on the same platform, which
enables a smooth, cost-effective migration to a more data optimized service
infrastructure.
Inter-operability with other equipment in the network continues to be an
important capability to current and prospective customers. During the first
quarter, we successfully demonstrated multi-vendor inter-operability of MPLS
services over a GMPLS-enabled intelligent optical core, at an event held in
conjunction with the MPLS 2003 International Conference. This testing
encompassed a wide range of platforms which included inter-operability with
industry leading router vendors.
Now I'd like to turn to customer relationships, a critical area of focus for
Sycamore. During the first quarter, we added resources to strengthen our direct
relationships with existing and prospective customers. We are also working
closely with strategic partners to access a broader set of customers and gain
entry into specific market segments.
In terms of new customer prospects, we believe that we made important progress
during the quarter. As we evaluate near term opportunities, we believe certain
prospective customers are nearing the end of their technology trials and
evaluations, and are moving closer toward vendor selection.
While we are optimistic about the capabilities of our strong product offering,
uncertainty remains about the timing and outcome of vendor selection decisions.
Even if selected, we face numerous challenges and uncertainties, which impair
our visibility in the near term including the following: First, the dollar
magnitude of potential customer deployment plans is uncertain. Second, the
timing of potential customer deployment plans has not been finalized. Third, in
some cases negotiations regarding business terms has yet to commence, and
finally continued field testing may be required.
In addition, as we moved through the first quarter there was a significant
amount of speculation regarding Sycamore's participation in various customer
trials and evaluation. While it is always our goal to be responsive to our
investors, I would like to remind you of our longstanding policy of not
commenting on specific customer trials and evaluations. As a result, during the
question and answer portion of this call, we will continue to adhere to this
policy and not be commenting on specific customer evaluations or trials.
Finally, I would like to provide a brief update on the competitive landscape.
As you know, there are limited optical switching opportunities worldwide given
the current capital spending constraints. As a result, competition for these
opportunities is intense, resulting in continued pricing pressure which may
serve to constrain gross margins in the near term. While we believe that the
advantages of Sycamore's products are compelling,
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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the environment and industry structure still remains challenging. In order to
deal with these market dynamics over the next several quarters, we will
continue to explore cost savings initiatives to enable us to address this
challenge.
Now I would like to turn the call over to Fran.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
Thanks, Dan. First I will discuss the first quarter results and then I'll turn
to the financial guidance. Please note that throughout my discussion I will
reference both GAAP and pro forma financial information. As discussed earlier
we have provided GAAP reconciliation information within the press release and
the Investor Relations section of our web site. The first quarter pro forma
results exclude stock based compensation and payroll tax on stock option
exercises.
First turning to the P&L, revenue for the first quarter was $8.4 million. First
quarter revenue reflects a decrease from the prior quarter as our business
continues to be impacted by constrained service provider cap ex. Specifically
we continue to see existing customers modifying their network build plans and
prospective customers extending trial and evaluation periods. First quarter
service revenue was $2.3 million, or 27% of quarterly revenue. Sycamore had two
10% customers in the first quarter, with all of our quarterly revenue from
international customers. In terms of product mix, the majority of first quarter
product revenue is from the switching products, which include the SN 3000 and
the SN 16000. Transport related products contributed very modestly to first
quarter revenue. As we've discussed, we continue to expect a small amount of
transport revenue in the near term as customers complete their network
deployments.
Pro forma gross margin for the first quarter was 32.2%, up from 28.6 last
quarter. Despite the sequential decline in revenue, pro forma gross margin
increased from the prior quarter due to the following factors: first, the
absence of separation costs associated with the fourth quarter work force
realignment activities; second, lower personnel and related expenses as a
result of lower head count above the line; third, lower customer service and
manufacturing expenses as a result of ongoing cost savings initiatives; and
finally, a reduction in the provision for warranty charges.
Pro forma operating expenses totaled $17.7 million, down from the prior
quarter, primarily due to the timing of certain R&D initiatives and the cost
savings associated with the Q4 work force realignment activities. Research and
development expenses were $11.3 million, compared with $12.4 million last
quarter. Sales and marketing expenses were $4.4 million, compared with $4.9
million last quarter. Administrative expenses were $2 million, flat with last
quarter. Other income for the first quarter was $4.3 million. The first quarter
pro forma net loss was $10.7 million, or a loss of 4 cents per share.
Now turning to our GAAP P&L. On a GAAP basis the gross margin was 30.1%, which
includes $180,000 of stock based compensation and $5,000 of payroll tax on
stock option exercises. GAAP operating expenses totaled $19 million, which
include the pro forma operating expenses discussed earlier as well as $1.3
million of stock based compensation and $2,000 of payroll tax on stock option
exercises. The first quarter GAAP net loss was $12.2 million, or a loss of five
cents per share. In Q1, basic shares outstanding were 270 million.
Now turning to the balance sheet. Sycamore ended the first quarter with total
cash, cash equivalents, short and long-term investments of approximately $986.8
million, a decrease of approximately $8.7 million from the fourth quarter.
Total cash burn includes $1.9 million in restructuring payments and $6.8
million in operating burn. Accounts receivable decreased by $3.4 million, to
approximately $7.4 million as a result of strong collections in the quarter. In
Q1, the DSO was 79 days, a decrease of 11 days from the prior quarter.
As we've discussed previously in recent quarters a significant percentage of
the DSO was attributed to one customer with extended payment terms. Excluding
the impact of this one customer, DSO's would be 68 days. During the past year,
this customer continued to pay in accordance with the contract terms.
Accordingly, the receivable balance outstanding declined significantly and the
remaining balance is expected to be paid in full in the coming quarters. As a
result, we expect that this customer's remaining extended payment term balance
will no longer have a material impact on the DSO as it has in the past several
quarters. We continue to do business with this customer under industry standard
payment terms.
Inventory increased by $2.2 million from the prior quarter to $7.3 million,
primarily due to our investment in evaluation and trial units. As Dan noted, we
expect to continue to invest in evaluation and trial units, which may increase
inventory and cash burn in the coming quarters. If we are not successful in
closing new business opportunities, we may have to write off a portion of this
inventory in a subsequent quarter. At the end of the first quarter, the
inventory balance was composed of approximately 5% raw materials and 95% in WIP
and finished goods.
We ended the first quarter with a total of 368 employees, a reduction of five
employees over the fourth quarter.
Now moving to the financial guidance. Let me remind you that this discussion
includes forward-looking statements and you should review Sycamore's recent SEC
filings that identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements.
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without the prior written consent of CCBN.com, Inc.
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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Given the current market conditions including existing customers modifying
their network build plans and prospective customers extending evaluation and
trials periods, we have limited visibility for the next quarter. While we are
optimistic about the capabilities of our products, we are still uncertain about
the timing and outcome of vendor selection decisions. As Dan mentioned, even if
selected, we face numerous challenges and uncertainties. As a result, we will
not be providing revenue guidance for the second quarter.
Due to the issues associated with forecasting revenue, we will not be providing
second quarter gross margin guidance. As we've said, gross margins are
difficult to forecast due to a number of factors including product mix, volume,
overhead absorption, pricing and the effect of increased competitive pressures
associated with new business opportunities.
With respect to operating expenses, we anticipate second quarter pro forma
operating expenses will likely be between $17.5 to $19.5 million. Based on our
cash position we expect interest and other income to be $3 to $4 million in the
second quarter. Please note that we will not be providing for taxes due to
anticipated losses. In Q1, basic shares outstanding was 270 million and we
anticipate share count will grow by one to two million in the second quarter.
In terms of cash burn, for the past couple of quarters the cash burn has been
at or below $10 million. As we look forward, however, we anticipate that second
quarter cash burn will likely increase above $10 million as we continue to make
the investments in inventory and research and development that we believe are
necessary to satisfy the needs of existing and prospective customers. At this
time, however, we are not in a position to provide specific ranges of cash
burn.
Again, I would like to remind you that Sycamore will not comment on its
financial guidance unless it's done through a public disclosure.
At this point I will turn the call back to the operator to begin the question
and answer session.
QUESTION AND ANSWER
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OPERATOR
Thank you. Ladies and gentlemen, if you would like to register a question,
please press the 1 followed by the 4 on your telephone. You will hear a three
tone prompt to acknowledge your request. If your question has been answered,
and you wish to withdraw your polling request, you will need to press the 1
followed by the 3. If you are using a speaker phone, please pick up your
handset before entering your request. One moment please for the first question.
Our first question comes from the line of Hasan Imam with Thomas Weisel
Partners. Please go ahead with your questions.
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MIKE DEMICHELE - THOMAS WEISEL PARTNERS - ANALYST
Hi guys. This is actually Mike DeMichele for Hasan. I just had a quick
question on the inventory uptick. I was wondering if you could categorize that
a little bit for us. I mean is it mostly from one customer? Is it, you know, a
combination of several? Just some rough percentages there. And kind of what's
the expectation of the magnitude of the change in that going forward? And then
maybe as a corollary, if you could give us some color, you know. You said you
were pretty close on a number of deals, so just wondering how many of those you
think are coming to closure where we'll have a sense of whowon, who didn't,
what people are doing or what they are not doing? Thanks.
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
I'll take the latter part of the first question first and then Fran can
comment on the inventory piece. Again I think you mischaracterized what we
said. I think we said, as we always have said, we are not going to comment on
timing or magnitude of potential trials. So we're not in a position to answer
the second part of that question. And I will ask Fran to cover the inventory
portion.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
Sure. With respect to this quarter's increase, the increase was $2.2 million
and as we look forward, we are continuing to participate in trials and
evaluations and as Dan spoke to, we are pleased with our progress and will
continue to participate in evaluations and trials. Unfortunately, I am going to
have to decline to comment on the number of trials and the magnitude within the
increase this quarter. But I think it's safe to assume that a majority of that
is associated with our participation in trials.
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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MIKE DEMICHELE - THOMAS WEISEL PARTNERS - ANALYST
Okay. And then let me just try one more. Is there any sense, I think you
talked about as a little bit about how the R&D could trend up going forward as
you prepare for some of these trials. Just any sense of the magnitude there? Or
maybe if not specifically, maybe you could just give general commentary in
terms of, let's say, you know, on a per trial basis how much R&D you need to
spend to do one trial, generally speaking?
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
I'll cover the R&D. Again the R&D that we are engaging in is not trial
specific in the main. It's very, very little customization work that is being
done. The things that we are developing are broadly applicable in all the
trials and all the situations that we are participating in at this point in
time, and we've given guidance with respect to where we think operating
expenses are going to be in the second quarter. So I think that's the best as
we can characterize the position at this time.
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MIKE DEMICHELE - THOMAS WEISEL PARTNERS - ANALYST
Okay. Thanks guys.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
I will just add to that with respect to the OPEX guidance, the range $17.5 to
$19.5 certainly contemplates project materials that may be incurred in the
second quarter. So some of the uptick that is in the range of OPEX guidance
certainly contemplates increases perhaps in the R&D line.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you Mike. Next question operator.
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OPERATOR
Our next question comes from the line of Alex Henderson with Smith Barney.
Please go ahead with your questions.
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MIKE GENOVESE - SALOMON SMITH BARNEY - ANALYST
Yes, thanks. This is Mike Genovese for Alex Henderson. Dan, can you comment on
- - I didn't hear you mention Siemens at all in the partnership, how that
relationship is going, if you are seeing any traction whether domestically or
abroad with that relationship. Thanks.
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Well again, I think that I didn't specifically talk about it but I will in the
sense of I think the, our activities with Siemens remain largely international
and we are continuing to make progress with respect to opportunities moving
through the sales pipeline there but I think that's all I can characterize at
this point in time.
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MIKE GENOVESE - SALOMON SMITH BARNEY - ANALYST
One other question, there. Have you made the R&D investments to integrate that
your switching and their transport? Has that money been spent? Is that a
product that a customer could buy today if it was ready to make a purchase?
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Yes, that development was completed last spring and so the dollars associated
with that investment are long since past us. And, yes, it's able to be ordered
off the shelf.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you very much, Mike. Next question operator.
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OPERATOR
Our next question comes from the line of Simon Leopold with Merrill Lynch.
Please go ahead with your questions.
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SIMON LEOPOLD - MERRILL LYNCH & CO. - ANALYST
Thank you. I just wanted to first double-check, Dan, in your remarks in the
beginning, talking about the customer activity. I believe you implied, but
maybe didn't specifically say that there are no new contracts that you've
signed but you're making progress. I want to confirm, no new contracts.
My second question concerns the inventory. I think the comment was that WIP
plus finished goods was at about 95%. Would it be possible to break that up
between those two categories as well as compare that to the last quarter's
levels? And just finally, if you can give us an update on your thoughts about
acquisitions or use of cash. That's it. Thank you.
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Okay. I'll take the first part of the question and then the second part of the
question Fran will cover with respect to inventories then I will come back to
the question in terms of potential acquisitions. I think you are correct, I did
not state in my comments with respect to new contracts or the like, and again
we have never commented on new contracts or trials or evaluations in process
until they are announced and we did not make any announcements in the quarter
with respect to new contracts. Fran, if you want to cover the inventory part of
the question.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
Sure. With respect to inventory, the break out between WIP and finished goods
combined at 95, and 87 is finished goods and 8% is WIP. In comparison to last
quarter, I actually don't have that information with me at this time.
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
With respect to use of the cash, again, I think our strategy and tactics that
support that strategy have been first and foremost to focus on the three
aspects in our business in terms of the disciplined financial management and
the technology innovation and customer relationships. With respect to the
technology, we continue to invest at a relatively significant rate in making
sure that our switching platforms are the best and the most advanced in the
world, and we think we've attained that. I think the other energies in the
business are really focused on other things that we could do to complement that
strong technology base both in that existing market as well as adjacent and
complementary markets. And so we continue to do a lot of work in that area and
we're not ready to state what our conclusions are in that thinking process at
this point in time.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you very much, Simon. Next question operator.
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OPERATOR
Our next question comes from the line of Chet White with Merriman Curhan Ford
& Co. Please go ahead with your question.
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CHET WHITE - MERRIMAN CURHAN FORD & CO. - ANALYST
Thank you very much. Could I inquire, the opportunities that you have could
you kind of categorize, what are you seeing as far as technology and
applications? More collapsed ring or sizeable new mesh opportunities? And also
just a clarification, you said that you didn't announce any new contracts but
there could have been, you just didn't announce any so you didn't discuss any,
but at the same time all of your revenue was international this quarter?
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Yes that's correct, all of the revenue was international this quarter. With
respect to the trends that we're seeing, based on the active projects that we
see, service providers are really requesting very strong standards-based BLSR
support coupled with very strong DCS or digital cross connect functionality and
a demonstrable and provable roadmap to mesh. And I think what we are starting
to see is that roadmap to mesh is translating into specific deployment goals
and objectives for mesh, and so I think we've seen progress in that regard.
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CHET WHITE - MERRIMAN CURHAN FORD & CO. - ANALYST
Okay. Thank you very much.
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OPERATOR
The next question comes from the line of Todd Koffman with Raymond James.
Please go ahead with your question.
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TODD KOFFMAN - RAYMOND JAMES & CO. - ANALYST
Thank you. As we listen to your comments or lack thereof, it sounds like your
visibility could be construed as maybe getting worse while others are getting
better and I think that this may be the first quarter in sometime where you've
decided or elected not to provide revenue guidance. My question is what's the
contrast between your visibility versus others and what happened in the last
few months that made your decision not to provide revenue guidance going
forward? Thank you.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
I think from my perspective, I think there's a difference in this quarter as
we look forward for primarily two reasons. The first is that in prior quarters
we talked about the lack of visibility while we have a solid existing customer
base, we continue, and as we said in previous quarters, we continue to see
changes in the network deployment plans of existing customers. And in most
quarters, given the range of revenue guidance, we can accommodate shifts
between one quarter into the next. This quarter in particular the visibility
was more complex and decreased for us because we had certain vendor selection
decisions that may or may not happen in the quarter and as Dan talked in his
prepared remarks, it certainly seems as though some of the trials that we
participated in are getting close to making decisions. And that presents
challenges on the upside for us in terms of being able to guide, coupled with
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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challenges on the down side with existing customers still changing their
network deployment plans. Those factors combined led us to the conclusion that
at this point until we get greater certainty it makes sense to not provide the
revenue guidance.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you very much Todd.
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OPERATOR
Ladies and gentlemen, as a reminder, please keep your questions to one
question and one follow up per queue. Our next question comes from the line of
Steve Levy from Lehman Brothers. Please go ahead with your question.
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MARCUS KUPFERSCHMIDT - LEHMAN BROTHERS - ANALYST
Hi, it's Marcus Kupferschmidt for Steve Levy. Fran, just to clarify on one
thing you just said, in terms of trying to better understand the visibility to
the current customer base. Now, is vendor selection affecting anything in terms
of visibility to the current customer base or is the limited visibility there
truly just a function of the constantly changing networks plans? And I have a
follow up to that.
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
Vendor selection is, I look at it as two separate comments. The vendor
selection comment really goes to new or prospective customers and the existing
customer comment is for, you know, customers that we have that continue to work
with Sycamore but move orders between quarters.
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MARCUS KUPFERSCHMIDT - LEHMAN BROTHERS - ANALYST
Okay, great. And then, in terms of the customers that generated revenues this
quarter, can you give a sense of the number of those customers and should we
assume those were all customers that did generate revenues in prior quarters
for Sycamore?
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
Sure, let me give you some flavor with respect to the customers. In terms of
product revenue this quarter, there were a total of five customers. Of the five
customers, one customer purchased both transport products and switching
products, and then there were four for switching only customers. In terms of
customer service revenue, all of our customers that purchased products also
purchased service and there were, I think four additional customers on top of
the, in the customer service revenue mix.
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MARCUS KUPFERSCHMIDT - LEHMAN BROTHERS - ANALYST
Sure. And of those five customers that generated product revenues, those were
all prior revenue generating customers?
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FRANCES JEWELS - SYCAMORE NETWORKS, INC. - CFO
That's correct, yes.
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MARCUS KUPFERSCHMIDT - LEHMAN BROTHERS - ANALYST
Okay. Great. Thank you.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thanks Marcus, next question operator.
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OPERATOR
Our next question comes from the line of Paul Silverstein with Needham and
Company. Please go ahead with your question.
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PAUL SILVERSTEIN - NEEDHAM & COMPANY - ANALYST
Thanks, asked and answered. Thank you.
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OPERATOR
Our next question comes from the line of David Wai from RBC Capital Markets.
Please go ahead with your question.
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DAVID WAI - RBC CAPITAL MARKETS - ANALYST
Thank you. Can I ask a quick question around competition? I just wanted to go
back to your comment on how carriers are looking for a more tangible roadmap to
mesh and how that might change the competitive front, whether there are certain
products you see out there that are more competitive in that respect versus
others?
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
Okay. I guess from my point of view, lots of people talk about mesh but very
few people have the capability of delivering it. Even if it's on the road map
it's a long way in the future and it's
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FINAL TRANSCRIPT
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SCMR - Q1 2004 SYCAMORE NETWORKS EARNINGS CONFERENCE CALL
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something that we have had in operational networks for some time now and
consistently in the testing that we're seeing, we're significantly better
performing in all aspects of that.
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DAVID WAI - RBC CAPITAL MARKETS - ANALYST
And, do you see, are there any other competitors that you see are consistently
you know maybe or closer to you than others are?
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DANIEL SMITH - SYCAMORE NETWORKS, INC. - PRESIDENT AND CHIEF EXECUTIVE
I would say we'd see the usual people we see in the RFPs and testing
opportunities would be ourselves and Lucent, Ciena and then occasionally
Nortel.
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DAVID WAI - RBC CAPITAL MARKETS - ANALYST
Great. Thank you.
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OPERATOR
That does conclude our question and answer session at this time. I would now
like to turn it back to you for any closing remarks.
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ANDREW KRAMER - SYCAMORE NETWORKS, INC. - DIRECTOR OF INVESTOR RELATIONS
Thank you very much, operator. I'd like to thank everybody again for joining
us on the call today. If you have additional questions and you want to follow
up with Investor Relations, please give us a call. Thank you very much and
we'll talk to you soon.
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OPERATOR
Ladies and gentlemen that does conclude the conference call for today. We
thank you for your participation and ask that you please disconnect your lines.
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