OC Chipmakers Hope Cisco’s Rising Tide Lifts All Boats
Accesspoint Hits $150M Mark; Odetics Expands in Texas as Slutzky Steps Back
Technology business is in the chips, pal.
That’s what I say to those who may wonder why this column focuses so much on the travails of Orange County’s chipmakers.
Seriously, though, take a look at OC’s wealth and you’ll find technology,particularly chips,to be one of the biggest producers of it, rivaled only by real estate. I’ll just bet that house next door with the four-car garage busting at the seams with Porsche Boxters is owned by a chip engineer.
Sure, the chip guys have taken a drubbing of late. But Cisco Systems Inc.’s results for the quarter ended Sept. 30 offer some encouragement. Cisco’s earnings and revenue fell sharply from a year ago but still beat Wall Street’s expectations. Cisco’s quarterly earnings were $332 million, vs. $1.4 billion a year ago.
OC chipmakers have seen plenty of fallout from Cisco’s downturn. Now it probably won’t be long before we start seeing some boosts to companies such as Irvine-based Broadcom Corp., Newport Beach-based Conexant Systems Inc. and Irvine-based Microsemi Corp.
ABN AMRO analyst Kenneth Leon raised his rating on Cisco to “buy” from “add,” saying there are signs of growth ahead. He bumped his fiscal 2002 earnings estimate on Cisco to 23 cents a share from 12 cents. And he raised his revenue estimate to $19 billion from $17.1 billion.
Lehman Brothers analyst Tim Luke boosted his rating on Cisco to “buy” from “outperform” and raised his price target to 23 from 20. He doubled his fiscal 2002 earnings estimate to 22 cents a share.
And there are others.
Without putting too much hope out there for a recovery in networking gear, the news seems to gel with recent comments heard from analysts seeing rays of hope for the beleaguered sector.
In September, just on the heels of the terrorist attacks, Sanford Bernstein analyst Paul Sagawa,a longtime telecommunications bear,issued a research note saying that there could be a rebound in carrier spending by the end of next year.
And this reporter hears industry insiders,reluctant to publicly make such bold calls,predicting a comeback in telecom spending even sooner.
Of course, it’s a fool’s game to try to figure out whether inventories of networking gear, which telecom carriers use to build their networks, have gone down enough to justify buying new gear. But the qualitative evidence is compelling. So is the performance by some OC stocks. Since Oct. 1, Broadcom shares have jumped more than 100%, and Conexant shares have risen more than 50%.
Accesspoint Hits $150 million
Irvine-based Internet services company Accesspoint Corp. said it passed $150 million in electronic commerce transaction volumes for the year, a company benchmark. Accesspoint said it now serves about 8,500 electronic retailers nationwide.
The growth comes within Accesspoint’s first year as a processor of credit-card payments. In October alone, Accesspoint said, it experienced a 25% increase in transaction volume, and a 38% increase in new merchant accounts vs. September.
“We have begun to hit our stride,” said Al Urcuyo, president of Accesspoint’s Processing Source International Inc. unit, which is responsible for credit-card processing. “The credit-card and check-processing industries continue to present profitable opportunities even in a down-turning economy. We are looking forward to continuing our momentum as we enter our second year as a processor.”
Odetics Expands, Shuffles
Odetics Broadcast, a subsidiary of Anaheim-based incubator Odetics Inc., said it plans to expand operations in Austin, Texas.
The move is designed to handle what Odetics said is increased business for its AIRO 9.0 product. AIRO 9.0 allows broadcasters to manage data and make digital presentations to viewers. Odetics AIRO Broadcast product manager Brian Lewis has been promoted to director of operations in Austin.
“We’ve seen a very favorable industry response to our AIRO 9.0 product since its release in September of this year,” said Steve L’Heureux, president of Odetics Broadcast. “Our strategy in Austin is intended to cost effectively accommodate a more aggressive software development and customer support function for AIRO.”
The new Austin operations also mean more positions need to be filled.
“With these changes in Austin comes a variety of employment openings, including a new product manager as well as positions in technical support and sales, which Brian Lewis will manage,” L’Heureux said.
Just as Odetics Broadcast was opening a new facility, parent Odetics was bringing a close to an era. Odetics founder Joel Slutzky recently said he would be stepping down as chief executive and would turn over those duties to Chief Operating Officer Greg Miner.
“The genesis of the plan is about a year old,” Slutzky said. “Last December we recognized that our access to the capital markets had closed for the foreseeable future. At that time, we were aggressively investing in our subsidiary companies,as reflected in our quarterly operating expense burn rate of $15 million, and significant quarterly losses.”
