Comments on: Fairpoint & Occam Networks http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/ More Signal. Less Noise. Thu, 02 Apr 2009 12:29:57 -0700 http://wordpress.org/?v=2.9.1 hourly 1 By: Andrew Schmitt http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1707 Andrew Schmitt Tue, 06 May 2008 15:20:14 +0000 http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1707 On Pannaway: Certainly all qualitative data points to them not participating. If I had to guess I would agree that Occam will take most of the share. Occam praised another NH company, Wilcom, in their Fairpoint release, which leads me to believe Pannaway was tossed in as another token NH company. On Capex: The 20-30% was not vetted with Fairpoint or OCcam. The $781 figure includes 'operating' capex. Fairpoint would incur significant capex even if they bought no new hardware simply by maintaining the existing equipment in the field. While the number seems low for a 'new build' you have to take into account the top line also includes 'routine' capex not related to new builds. 20%-30% is a rough guideline and is why a bottoms up approach is really more accurate. Taken together, one gets the best range of revenue one can expect when working with limited information. If the range was 30-40% then the bottoms up analysis would diverge, which means per-port cost assumptions are too low. On Pannaway:

Certainly all qualitative data points to them not participating. If I had to guess I would agree that Occam will take most of the share. Occam praised another NH company, Wilcom, in their Fairpoint release, which leads me to believe Pannaway was tossed in as another token NH company.

On Capex:

The 20-30% was not vetted with Fairpoint or OCcam. The $781 figure includes ‘operating’ capex. Fairpoint would incur significant capex even if they bought no new hardware simply by maintaining the existing equipment in the field. While the number seems low for a ‘new build’ you have to take into account the top line also includes ‘routine’ capex not related to new builds.

20%-30% is a rough guideline and is why a bottoms up approach is really more accurate. Taken together, one gets the best range of revenue one can expect when working with limited information. If the range was 30-40% then the bottoms up analysis would diverge, which means per-port cost assumptions are too low.

]]> By: osxman http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1706 osxman Tue, 06 May 2008 14:40:06 +0000 http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1706 Andrew, Do you believe that your 20-30% equipment estimate for capex is low? Did you vet this with either Occam or Fairpoint? The number seems low to me as I am presuming there will be significant reuse of property and plant. I don't think there will be that much fiber and I don't know much about copper conditioning but how much can that be? Andrew,

Do you believe that your 20-30% equipment estimate for capex is low? Did you vet this with either Occam or Fairpoint? The number seems low to me as I am presuming there will be significant reuse of property and plant.

I don’t think there will be that much fiber and I don’t know much about copper conditioning but how much can that be?

]]> By: osxman http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1705 osxman Tue, 06 May 2008 13:40:59 +0000 http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1705 In their most recent conference call, Occam made it clear they were quite comfortable they would get the considerable majority of the contract. In their most recent conference call, Occam made it clear they were quite comfortable they would get the considerable majority of the contract.

]]> By: osxman http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1704 osxman Tue, 06 May 2008 13:40:17 +0000 http://www.nyquistcapital.com/2008/05/05/fairpoint-occam-networks/#comment-1704 I am aware of why you believe that Pannaway is a vendor, which is certain side comments made by FRP management on their 4/17 confernece call. To me, it isn't entirely obvious as there has been no press release by either Pannaway or FRP as there was in the case of Occam. Certainly, I think Pannaway would want to announce such an important contract so the fact that there has been no announcement leads me to believe either that the contract is not a done deal, or that Pannaway's role will be sufficiently marginalized so that a conscious decision was made not to press release it. I am aware of why you believe that Pannaway is a vendor, which is certain side comments made by FRP management on their 4/17 confernece call. To me, it isn’t entirely obvious as there has been no press release by either Pannaway or FRP as there was in the case of Occam. Certainly, I think Pannaway would want to announce such an important contract so the fact that there has been no announcement leads me to believe either that the contract is not a done deal, or that Pannaway’s role will be sufficiently marginalized so that a conscious decision was made not to press release it.

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