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gfast map nov

Dark Green: Firm commitments from incumbent: BT (10M), Belgacom, Australian NBN, Swisscom,  Austria, Bezeq Israel, Chunghwa Taiwan, Telus Canada, Telekom South Africa, SK Korea, (U.S.) AT&T, Century, Frontier, Windstream, Belgium, Omantel

Mid Pink: Smaller carriers in Germany, Norway, Finland, Japan

Light Green: Incumbent likely:  France, Germany, Italy

Ikanos artwork.320x122jpg

Promises Ikanos chips will be better by yearend 2015. The CEO of Ikanos of course will claim his chips are the best. Tahernia did this in an interesting way, introducing what he calls "second generation" G.fast chips.

What's the difference? Ikanos intends to sample later this year chips that offer: "true gigabit performance," power requirement "broadly deployable" and "backward compatibility with existing VDSL services"

The plan is alpha samples to selected customers in q3 and marketing in q4. We'll be able to determine whether they met these goals when others can test these chips. One customer is convinced: Alcatel has invested $12M.

Ikanos' financial issues are well known in the industry.

They do an excellent job presenting finances clearly in their investor call.

Here are the key comments via Seeking Alpha and the financial release.

There are several key attributes missing in these first generation products that will prevent wide scale adoption such as true gigabit performance, a broadly deployable power profile and backward compatibility with existing VDSL services to name a few.

This is the area in which Ikanos has made significant investments to ensure our gigabit product roadmap needs all of the critical features needed who broad carrier adoption taking into account all of the practical challenges associated with carrier deployments. Whether it’s qualifying a subscriber’s home network for gigabit service, minimizing the cost of new gateway installation or ensuring the best end-to-end ultra-broadband services, Ikanos gateway, access and inSIGHT software products are uniquely designed to address all of the carriers' deployment concerns.

During the first quarter, we achieved important development milestones in our gigabit product road map that will allow us to introduce our second generation G.fast product to the market in the fourth quarter of this year with alpha customers expected to receive samples in the third quarter.

Ikanos Communications Announces Results for First Quarter 2015

[To view a PDF of this press release including financial tables, click here]

First Quarter Highlights

  • http://www.ikanos.com/wp-content/themes/ikanos/images/bluedot.jpg) 0% 0% no-repeat;">Revenue of $10.2 million
  • http://www.ikanos.com/wp-content/themes/ikanos/images/bluedot.jpg) 0% 0% no-repeat;">GAAP net loss of $(12.0) million, or $(0.77) per share
  • http://www.ikanos.com/wp-content/themes/ikanos/images/bluedot.jpg) 0% 0% no-repeat;">Ending cash and cash equivalents of $13.0 million

FREMONT, Calif., May 4, 2015 — Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of advanced broadband semiconductor and software products for the connected home, today announced its financial results for the first quarter of 2015, ended March 29, 2015.

“First quarter revenue was $10.2 million, with a GAAP gross profit of 49%, which due to a favorable product mix exceeded our gross-profit guidance,” said Dennis Bencala, CFO of Ikanos. “During the first quarter, we worked to manage our business and cash position, with operating expenses of $16.8 million, and the completion of a common stock rights offering in which the Company raised approximately $12.4 million, before expenses, resulting in a cash and short-term investments of $13.0 million at the end of the first quarter.” Bencala continued, “We also signed the definitive collaboration agreement with Alcatel-Lucent after the quarter closed, allowing us to draw down on the previously agreed-to $10 million loan.”

“I’m pleased to report significant progress in executing our gigabit strategy. We are on track for second-generationG.fast product sample availability to alpha customers in the third quarter,” said Omid Tahernia, president and CEO of Ikanos. “In addition, we achieved a significant milestone in Japan and Korea, establishing Ikanos as the only company that has demonstrated over 1 gigabit performance on copper at a distance of 100 meters in OEM lab testing.”

Tahernia continued, “While the majority of our R&D investment is focused on successful execution of our gigabit strategy, we are also putting significant effort into driving revenue ramp with key customers rolling out new products this year, based on our Vx500 gateway processors, Velocity-3 in China, and inSIGHT software. In the last two years, we have gained significant design win momentum, increasing the life-time value of our design win pipeline by a factor of 10 from 2013 to 2014.  We continued this momentum last quarter by securing two additional gateway opportunities. In addition, as already announced, we have extended the capabilities of our inSIGHT analytics beyond copper networks, thereby significantly expanding inSIGHT’s market opportunity to cover all broadband access. This includes cable and mobile operators, as well as residential fiber deployments.” Tahernia concluded, “While our short-term revenue outlook remains stable, we are optimistic about our future revenue trends, based on new customers’ progress towards production ramp later this year, our established leadership and eco-system partnerships in ultra-broadband, and the significant market interest in our gigabit products and strategy.”

Financial Details
Ikanos reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. Non-GAAP net income (loss), non-GAAP gross profits and non-GAAP operating expenses, where applicable, exclude the income statement effects of stock-based compensation and the amortization of intangible assets. Ikanos has provided these measures because its management believes these additional non-GAAP measures are useful to investors for performing financial analysis, as these additional measures highlight Ikanos’ recurring operating results. Ikanos’ management uses these non-GAAP measures internally to evaluate its operating performance and to plan for its future. However, non-GAAP measures are not a substitute for GAAP reporting. For a reconciliation of GAAP versus non-GAAP financial information, please see the attached schedules.

First Quarter 2015 Results
Revenue for the first quarter of 2015 was $10.2 million, compared to revenue of $14.5 million for the first quarter of 2014 and revenue of $11.5 million for the fourth quarter of 2014. GAAP gross profit for the first quarter of 2015 was 49%, which is consistent with GAAP gross profit for the first quarter of 2014 and the fourth quarter of 2014.

Non-GAAP gross profit for the first quarter of 2015 was 50%, which is consistent with non-GAAP gross profit for the first quarter of 2014 and the fourth quarter of 2014.

GAAP operating expenses for the first quarter of 2015 were $16.8 million, compared to operating expenses of $17.5 million for the first quarter of 2014 and operating expenses of $15.7 million for the fourth quarter of 2014.

Non-GAAP operating expenses for the first quarter of 2015 were $15.8 million, compared to non-GAAP operating expenses of $16.5 million for the first quarter of 2014 and non-GAAP operating expenses of $14.7 million for the fourth quarter of 2014.

GAAP net loss for the first quarter of 2015 was $(12.0) million, or a loss of $(0.77) per share on 15.6 million weighted average shares outstanding, compared to a GAAP net loss of $(10.3) million, or $(1.04) per share on 9.9 million weighted average shares outstanding, for the first quarter of 2014 and a GAAP net loss of $(10.4) million, or $(0.75) per share on 13.9 million weighted shares outstanding, for the fourth quarter of 2014.

Non-GAAP net loss for the first quarter of 2015 was $(10.8) million, or a loss of $(0.69) per share on 15.6 million weighted average shares outstanding, compared to a non-GAAP net loss of $(9.2) million, or $(0.93) per share on 9.9 million weighted average shares outstanding, for the first quarter of 2014 and a non-GAAP loss of $(9.3) million, or $(0.67) per share on 13.9 million weighted average shares outstanding, for the fourth quarter of 2014.

Cash and cash equivalents and short-term investments at the end of the first quarter of 2015 were $13.0 million, compared to $15.7 million at the end of the fourth quarter of 2014. Our year-end cash included proceeds of $16.3 million from our September 29, 2014 private equity placement. Additionally, at the end of the first quarter of 2015, inventory was $2.1 million, compared to $2.0 million at the end of the fourth quarter of 2014. Current liabilities at the end of the first quarter of 2015 were $18.1 million, compared to $22.4 million at the end of the fourth quarter of 2014. For both the first quarter of 2015 and fourth quarter of 2014, current liabilities included an accounts receivable-backed revolving line of credit advance of $5.0 million and $10.8 million, respectively.

For a more complete review of our first quarter 2015 results please see the attached financial schedules.

Outlook
Revenue is expected to be between $10.0 million and $12.0 million for the second quarter of 2015.

GAAP gross profit for the second quarter of 2015 is expected to be between 55% and 57%. Non-GAAP gross profit is expected to be between 56% and 58%. GAAP operating expenses for the second quarter of 2015 are expected to be in the range of $17.5 million to $18.5 million. Non-GAAP operating expenses are expected to be in the range of $16.5 million to $17.5 million. GAAP net loss for the second quarter of 2015 is expected to be in the range of approximately $(10.8) million to $(13.1) million, or a GAAP loss per share of $(0.63) to $(0.76). Non-GAAP net loss is expected to be in the range of approximately $(9.6) million to $(12.0) million, or a non-GAAP loss per share of $(0.56) to $(0.70).

 

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G.fast News

I’m still working through remarkable presentations from the Broadband Forum events. Michael Weissman, Bernd Hesse and team did a remarkable job choosing the speakers. http://bit.ly/BBFBASE

Deutsche Telecom: 35b Supervectoring Delayed to 2019 http://bit.ly/35blater
Broadcom is now over 3 years late. DT briefed German reporters after their financial call and revealed 35b was now delayed until 2019. 35b should deliver 200+ meg downloads 500-600 meters, a crucial tool for DT, which is losing share to cable. Cable now covers about 70% of Germany and is expanding. DT now only offers 50-100 megabit DSL while cable is often 400 megabits, going to a gigabit. 

The problem is software; the hardware is shipping and supposedly will work. DT says 35b is not ready to turn on. Broadcom in 2015 said 35b was in "production" in the press release below. Alcatel in early 2016 said to expect complete systems very soon. "35g is very similar to 17a so there should be little delay."

Broadcom's problems are leading major telcos and vendors to have a plan B, using Sckipio G.fast. DT itself is planning extensive G.fast deployments in 2019, mostly in apartment buildings. http://bit.ly/35blater

Gigabit 100 Meters - Unless the Wires are Lousy http://bit.ly/gflousy
Speeds are fine, "Unless there's a line problem." I've been reporting for three years that ~10% of lines have problems. In the chart by Rami Verbin of Sckipio, he finds G.fast goes ~130 meters on good lines. Poor lines have about half the reach. 

His chart roughly matches the reports from Swisscom, Belgacom, and England for both G.fast & vectored DSL. The 10% with problems can cause the majority of the line-related complaints to support. The angry customers drive up cost.

Rami's solution to reach the gigabit is bonding, supported on the Sckipio chips. Verbin made some additional points:

  • 4 gigabits is possible by bonding two decent 2 gigabit lines.
  • Even in a service from remote cabinets, ~25% are close enough to get a full gigabit."
  • cDTA and iDTA are practical ways to deliver much higher upstream by switching some bandwidth from downstream to upstream only when needed.
  • 35B will probably be similar but Deutsche Telecom doesn't expect to deploy until 2019. http://bit.ly/gflousy

AT&T Wants Coax 2-5 Gigabit G.fast. Very Soon. http://bit.ly/ATTCoax
AT&T faces intense competition from cable, talking about 10 gigabits in both directions. (Cable will only be 1 gig down, ~100 meg up, until ~2021.) AT&T wants something to brag about as well.

AT&T gained millions of lines of coax as part of the DirecTV deal. Alcatel and Huawei are leading the development of G.mgfast. That uses 424 MHz, full duplex, to achieve ~2.5 gigabits in both directions. The reach on telco twisted pair is only about 30 meters. On coax, those speeds can probably extend far enough to service most apartment buildings. Using 848 MHz, speeds can reach 5 gigabits. The ITU standards group has been aiming for 2019-2020 for G.mgfast, too slow for AT&T's marketers. David Titus wants a high-speed standard for coax "early in 2018." He believes that is "doable."http://bit.ly/ATTCoax

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