According to RBC Capital Markets, expect strong outperformance for the advanced optical technologies (AOT) segment of JDSU during tomorrow's release of its 4th Quarter 2008 results.
RBC Capital Markets Managing Director - Mark Sue commented to yours truly:
 "We're expecting encouraging results from JDSU with total revenues to come in slightly ahead of the consensus estimate of $396M and above the midpoint of the guidance range of $381 to $403M as the company recovered some previously slipped T&M deals."
"Non-GAAP EPS may be closer to our $0.12 vs. the consensus of $0.10 due to product mix which may skew operating margins." |
"At the moment, the stock is trading at 13X our CY09 earnings of $0.88."
"Considering the lumpiness of the business and some near term wireline capex pauses, we're maintaining our Sector Perform Rating."
"For FY1Q09, with an overall book to bill greater than 1.0, JDSU may provide revenues guidance in a range of $382M to $404M vs. the current consensus of $400M."
"JDSU may continue to emphasize short lead times and the book and ship nature of the CommTest division."
"Optical communications may see some magnified seasonality in the near term as vendor customers adjust to capex reductions at Sprint and lumpy cable builds."
"Having said that we've noted healthy demand for ROADM components."
"Overall gross margins may bounce back from depressed levels closer to 43.5% and we expect JDSU to reiterate its long term gross margins of 43-47% and its longer term operating margins of 10%."
"Nonetheless, the pace of operating margin recovery remains difficult to predict and we're estimating total operating margins of just 5.5%."
"By segment, Optical Communications may show encouraging sequential operating margin improvements from 4.6%."
"Strong outperformance is expected from the small but growing AOT segment in terms of revenues and margins."
"JDSU has evolved into a diversified optical portfolio company that is targeting growth opportunities in optical transport and access as well as broadband."
"The company's goal is to leverage its multiple products across a common customer base and to improve operating metrics."
"It's going to take a while for JDSU to reach the upper limits of its business model targets, in our opinion considering the current demand environment."
"Subsequently, forward earnings variability remains high, in our assessment."
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In the opinion of yours truly, there appears to be a very strange game of musical chairs being played by CCIE Agent™ Emmanuel Conde.
How so?
First, CCIE Agent™ Emmanuel Conde appears to be doing his CCIE recruiting in association with Bridge Resourcing Solutions, which appears to be an authorized as well as approved staffing vendor to Cisco.
Bridge Resourcing Solutions web page:
Eman's Blog web page:
Below is an August 12th, 2008 CCIE job post on Monster.Com where CCIE Agent Eman Conde appears to be doing his CCIE recruiting in association with Kenica Technologies Inc, which is not an authorized or approved staffing vendor to Cisco.
CCIE Agent - Eman Conde - Kenica Technologies Inc - Monster.Com Job Post
Content of CCIE Agent - Eman Conde - Kenica Technologies Inc - Nationwide-CCIE and Cisco Network Professionals - Monster.Com Job Post
What is really strange is that yours truly spoke briefly on the phone this morning with CCIE Agent™ Emmanuel Conde's boss at Bridge Resourcing - Charles Whitaker, who seemed totally unaware of Eman's Monster.Com CCIE recruiting in association with Kenica Technologies.
It is my understanding that Bridge Resourcing is authorized and approved by Cisco as a staffing vendor. However, it does not appear to yours truly that Kenica Technologies has been authorized or approved by Cisco as a staffing vendor.
What is going on here?
Related story:
CCIE water cooler gossip: CCIE agent rules of the road?
Cisco, Bridge Resourcing Solutions and Kenica Technologies have not responded to a request for comment.
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Yours truly stumbled upon the below tidbit regarding CCIE recruiting ethics which was published last month on CCIETALK - a blog for internetwork experts:
-------------------------------------
CCIE Agent Rules of the Road
"Achieving the status of Cisco’s Only Authorized CCIE Recruiter came with one strict rule and that is never to solicit a CCIE to leave one Channel Partner for another or to/from Cisco Systems."
"The fact is I will not go and seek out the CCIEs already with Partners or Cisco to leave for another role."
"If you are with a partner and actively searching and you reach out to me that is a different story."
"I always keep these activities confidential, remain available for questions about careers, your employer and anything I can contribute to your CCIE journey."
-------------------------------------
CCIE positions now available all over the globe
"CCIE Agent™ Eman (details available on the Cisco Talent Portal https://secure.partnertalentportal.com) is supporting numerous Cisco Channel Partners in their search for CCIE and Cisco engineers."
"CCIE Agent™ Emmanuel Conde has the distinction of being the only Cisco authorized CCIE recruiter because of his relentless support of CCIEs as they develop their career goals and strategies (his blog www.ccieagent.com)."
"The current positions Eman and Bridge Resourcing Solutions (www.bridgeresourcing.com) are looking to fill are located throughout the globe, so if you are thinking globally about your career you should consider discussing your plans with Eman."
Cisco has not responded to a request for answers and clarification regarding the following CCIE recruiting questions:
| 1. | Does CCIE Agent™ Emmanuel Conde hold the distinction of being the only Cisco authorized CCIE recruiter? |
| 2. | If Emmanuel Conde holds the distinction of being the only Cisco authorized CCIE recruiter, what role then does Bridge Resourcing Solutions play in regard to Emmanuel Conde's role as the only authorized CCIE Agent? Please clarify what Bridge Resourcing and Emmanuel Conde do for Cisco and its channel partners in order to get paid? |
| 3. | If Emmanuel Conde and/or Bridge Resourcing are paid by Cisco and/or a Cisco partner, how can Emmanuel Conde call himself a CCIE Agent™, it is my understanding that agents are paid commission by their clients, and if Emmanuel Conde and Bridge Resourcing are being paid by Cisco and/or a Cisco partner that would make them a Cisco Agent™ correct, not a CCIE Agent™? Please clarify this issue, thanks. |
| 4. | Please clarify the CCIE Agent™ rules of the road, does this rule stop CCIE Agent™ Emmanuel Conde as well as Bridge Resourcing from "reaching out" to CCIEs listed on Linkedin as well as BradReese.Com Cisco Resumes or even Network World, who are currently working for Cisco or Cisco channel partners? |
| 5. | Does the one strict rule to never solicit a CCIE to leave one Channel Partner for another or to/from Cisco Systems mean that Cisco has blessed Emmanuel Conde and Bridge Resourcing to aggressively poach CCIEs from service provider, enterprise, health-care, government and educational institution customers of Cisco and/or Cisco channel partners? |
| 6. | Are CCIE Agent™ Emmanuel Conde as well as Bridge Resourcing disclosing the financial remuneration they are being paid by Cisco and/or Cisco channel partners to those CCIEs that they are recruiting, while also disclosing all potential conflicts of interest that this financial remuneration paid by Cisco and/or Cisco channel partners may imply towards their unbiased representation of a CCIE employment candidate? |
| 7. | Yours truly has read in the past that CCIE Agent™ Emmanuel Conde prefers working with CCIEs that have a FREE CCIE Number, will Cisco please clarify the definition of a FREE CCIE Number, thank you? |
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Related story:
CCIE water cooler gossip: CCIE agent musical chair game?
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According to RBC Capital Markets, Cisco is a long-term threat to Brocade's Fibre Channel switching franchise.
RBC Capital Markets Analyst - Tom Curlin commented to yours truly:
"For fiscal 3Q08, Brocade reported upside revenue ($365.7 million) and non-GAAP EPS ($0.16) results versus the Street estimates ($351.7 million and $0.14)."
"Upside revenue in the quarter was driven by switch, embedded, and service revenue contributions, as the director business performance was rather muted even though Brocade is currently in a major director product refresh cycle."
"Despite solid enterprise-level visibility into the ongoing director product cycle, macroeconomic imposed conservatism led to Brocade providing a below normal seasonal sequential increase for revenue for the October 2008 quarter (+3-5% versus +6-8%); however, the revenue outlook was still above the Street consensus estimate (non-GAAP EPS outlook was in line)."
"Total revenue grew 3% sequentially and 12% year-over-year (+9% year-over-year excluding the SBS acquisition that closed in the April 2008 quarter)."
"Core SAN revenue increased 4% year-over-year and 1% sequentially, as switch revenue growth (+5%, +12% year-over-year) offset muted trends in the director business (down sequentially, +3% year-over-year)."
"Embedded switch revenue continued to report very strong results (+12% sequentially, +39% year-over-year)."
"Meanwhile, service revenue continued its healthy performance, with 8% sequential and 43% year-over-year growth."
"The OEM revenue mix was flat sequentially at 86%, reflecting 3% sequential and 14% year-over-year growth. EMC, HP, and IBM, each greater than 10% of revenue, totaled 62% of revenue, reflecting growth trends (-2% sequentially, +8% year-over-year) below the corporate figures."
"Geographically, Brocade noted that North American demand was stronger-than expected (40% mix), China and India continued their healthy growth rates, and Japan experienced a slowdown."
"Driven by an improved product gross margin, total gross margin improved 80 basis points sequentially to 61.9%, which was above the company's outlook of 59-60%. The sequential average selling price decline continued to be in the low-single digits, and Brocade expects this trend to continue for the October 2008 quarter. Operating margin was at 22.6%, down 30 basis points sequentially but still above the company's outlook for the quarter (19-20%) and its long-term range of 18-22%."
"Net cash totaled $421 million at quarter's end, which included $169 million of convertible debt that matures in February 2010 and a $160 million current liability associated with the recent share litigation settlement. For the first time over the past five quarters, inventory increased on a sequential basis, which we believe likely reflects Brocade's completion of reducing its legacy product inventory while the new 8Gb product inventory ramps. Reflecting a relatively linear quarter, days' sales outstanding were flat sequentially and down two days year-over-year to 43 and were well within the company's targeted range of 40-50 days."
"On a trailing 12-month basis, Brocade posted $294 million in cash flow from operations, $140 million in capital expenditures, and free cash flow to the firm (FCFf) of $154 million. On a diluted share basis, TTM July 2008 FCFf declined to $0.39 versus $0.51 for TTM April 2008 due to the large increase in capital expenditures which was mostly attributable to the new headquarter campus construction. In the quarter, Brocade repurchased $38 million of its shares (or ~1.3% of basic shares outstanding) and had $414 million remaining under the buyback authorization, which was suspended during the quarter due to the proposed Foundry acquisition and the associated large upcoming debt raise."
"Brocade reiterated its expectation that the economic environment will not improve until early CY09. For the October 2008 quarter, Brocade provided a revenue outlook ($375-$385 million) above but a non-GAAP EPS outlook ($0.15-$0.16) in line with the current Street consensus estimates ($373.6 million and $0.16). Gross margin is expected at 61-61.5% due to a higher director contribution benefiting profitability. Operating margin is expected at 20-22%, with Brocade continuing to impose expense discipline until an improvement in the macroeconomic environment. Also, the company noted that a typical seasonal sequential revenue growth trend for an October quarter is up 6-8%, which implies revenue of $391.3 million, leaving potential for upside revenue execution if the macroeconomic environment proves better than what Brocade currently expects."
"The Foundry Formula. This proposed combination addresses the Cisco threat in terms of product and go-to-market."
"Cisco's increasing focus on Ethernet as a unified fabric for the data center presents a long-term threat to Brocade's Fibre Channel switching franchise. With a broader portfolio that includes deep Ethernet capabilities, Brocade can neutralize this threat."
"Foundry also brings a more direct go-to-market model that can be leveraged to reduce Brocade's dependency on OEM channels and more effectively fight Cisco's larger presence. Originally provided at the mid-September 2007 analyst day presentation, Brocade's long-term operating profile includes gross margin of 57-60% and operating margin of 18-22%. Notably, current Street consensus estimates for Brocade on a standalone basis assume margins above this target operating range, yet Brocade has referenced Street consensus in providing accretion guidance for the deal. In our view this suggests that Brocade's internal plan for standalone FY09 operating margin is closer to Street than to guide, or that management believes the operating synergy potential in the combination with Foundry is greater than publicly indicated (i.e. the actual accretion potential is greater than indicated)."
"Director Level. Brocade is currently in the midst of its first major product cycle refresh since the McDATA acquisition. We believe the majority of Brocade's key OEMs are now selling both the DCX and 48k 8Gb Fibre Channel directors. The company reported total director revenue was seasonally down on a sequential basis and up only 3% year-over-year in the July 2008 quarter, which was a marked slowdown from the April 2008 quarter's results (+5% sequentially, +19% year-over-year). Brocade attributed this to normal seasonality. As for the coming quarters, we believe Brocade's ability to execute on this director cycle is a primary catalyst for near-to-intermediate upside revenue and gross margin potential."
"Competitively, Brocade does not expect Cisco in the market with an 8Gb MDS solution until the end of calendar 2008. Additionally, the recently introduced Nexus converged director platform, with its Ethernet centric approach, is not expected to gain material traction until the calendar 2009 time frame, coinciding with more substantial progress on the Data Center Ethernet (DCE) and Fibre-Channel-over-Ethernet (FCoE) standards."
"HBA Intentions. While Brocade initially leveraged an LSI-sourced product as an on-ramp into the 4Gb market, the company announced in June 2008 the availability of the internally-developed 8Gb Fibre Channel platform. Brocade expects initial HBA revenue in the second half of 2008 and more material revenue contribution in FY09. Both HDS and Fujitsu Siemens have committed to qualify and sell the 8Gb offering, and Brocade expects additional OEM qualifications in the October 2008 quarter. To be monitored is the extent to which Brocade can penetrate the existing stronghold on the adapter market currently shared by QLogic and Emulex."
"ILM Deliverance. Brocade continues to invest significant resources in expanding its emerging portfolio of information lifecycle management (ILM) software and service offerings. While FAN revenue continued to be an immaterial piece of business in the July 2008 quarter (down sequentially and year-over-year), service revenue strength helped recent execution (17% of revenue, +19% sequentially, +32% year-over-year). Excluding the impact of the recent acquisition of Strategic Business Systems (SBS), organic service revenue still grew well on a year-over-year basis at roughly 20%. Finally, go-to-market partnerships with HDS, IBM, and NetApp are expected to drive continued performance in the coming quarters."
"Based on our valuation and historical metric analysis, we estimate potential forward 12-month P/Es of 15x/8x on upside/downside execution. Brocade guided for upside revenue but in line non-GAAP EPS relative to the Street consensus estimates for the October 2008 quarter. Given the in line non-GAAP EPS outlook, we assume neutral execution sentiment over the near term, which implies a near-term trading range of $7-$8. However, the shares may get some support over the coming weeks as faster money trades the upcoming analyst day (September 17th)."
"On a 12-month basis, we maintained our $9 price target, Sector Perform rating, and Above Average risk assessment."
"Brocade is entering a period of easy comparables with a time to market advantage in 8 Gbps Fibre Channel switching versus Cisco."
"However, the proposed Foundry acquisition presents new execution risks and constrains financial flexibility."
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A CCIE provided the following gossip to yours truly:
"Hello Brad,"
"I have been reading all of the dire new rules for test taking with Cisco and Microsoft."
"I was wondering. In the last 12 months Cisco has minted about 2,598 new CCIEs."
"Will the volume of CCIEs start to go down, with the new testing program? It will be interesting to see if Cisco CCIEs and Microsoft MCSE numbers start to slide."
"The second group of CCIEs; are the sitting CCIEs. They need to re-certify every two years by passing the written again. Will that number start to drop too?"
"If the numbers do slide downward, will Cisco relax the Braindump filters to maintain the growth in high level certifications to support worldwide sales? Will end-users and VARs see certain numbers as weaker than others?
"You are a CCIE 21xxx that was Cisco Pre-Braindump filtering, so we..."
"Another unknown of the change in the rules is documentation. Cisco Press focuses on what sells, that is fair. Except if you are interested in anything other than CCIE R/S. Go to Amazon.com and look for CCIE Voice, CCIE Security, (very dated), CCIE Service Provider, CCIE Storage. What will Cisco do to make sure that the candidates have all of the resources necessary to pass the written and the Lab?"
"The last group is the CCIE training organizations. The rumors have long been that they use the Braindumps, ex-students, and their own staff’s testing experience, to help assure that their training material is relevant. Not teaching the test, but understanding what is on the test."
"Your Frame-Relay cloud will have OSPF running across it. So you want to..."
"Would this training material trigger a failing grade?"
"My bet is that the number of CCIEs minted each year will start to drop as students cannot pass the written to even sit for the Lab. At $350 a pop for the written, and $1,290 for the Lab. What do you do if you are looking at 3 written and 5 Labs,($7,500 without air travel, hotel, car, food, training time for each attempt, etc.) You just might pass on the whole proposition."
"For sitting CCIEs things might be looking very rosy in the next few years. Cisco would have to start being nice to us again. Maybe some raises in the works!"
--------------------------------------------
Cisco declined to comment.
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Yours truly has been intrigued by the notion of CCIE Mixers promoted on the Emmanuel Conde CCIE Agent Blog.
After much fanfare and ballyhoo, two CCIE Mixers were finally hosted.
The first CCIE Mixer was held March 5th, 2008 in the United Kingdom at the London Tower Bridge.
According to Emmanuel Conde:
"We made history in a historic space where centuries have left an indelible mark on all of civilization."
"We had a room full of London based CCIEs who each admitted they had never been in the company of more than 1 at a time."
"I was delighted to be the host of this event and have begun plans for the CCIE Mixers I will host in San Francisco, NYC and Colorado."
----------------------------------------
Little more than 2 months later, the second CCIE Mixer was held May 21st, 2008 in the United States at Philadelphia's Chart House Restaurant.
According to Emmanuel Conde:
"The CCIE Mixer hosted two dozen CCIEs from the area and one of the main topics for discussion was employee loyalty and retention."
"We are planning CCIE Mixers for Raleigh, NC, San Jose, CA and London and our team is working overtime to make these bigger and better."
----------------------------------------
Also, the following information caught my attention on the CCIE Mixer promotion web page:
"There are three basic rules; No Recruiting, No Sales, and No Training."
"Cisco representatives say hello and I say thanks for coming!"
"So the evenings are given over to real conversation and introductions to peers and professionals with like professional interests."
"CCIEs exchange contact information and grow their network and chat, argue and agree about things that strike their fancy."
----------------------------------------
It certainly sounds like a great concept, however, yours truly is finding it strikingly odd that no upcoming CCIE Mixers are currently being promoted.
Bridge Resourcing, Cisco and Emmanuel Conde did not respond to a request for comment.
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According to his CCIE Summer Salary Survey, David Evans of London - United Kingdom based Bridge Resourcing Solutions, is reporting on ccieflyer.com
"The highest base salary so far recorded is $261,900."
"Global average base salary is $109,980 with 16% bonus, taking average remuneration globally to $126,432, and with an average of 11 years of networking experience across all responses."
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"The highest bonus so far recorded is over 160% of basic salary!"
"In terms of bonuses, it is worth noting that 38% of all respondents so far do not receive any bonus at all. To put this into perspective, in the USA 76% of respondents get some kind of bonus and in Europe the figure is 71%."
Even though it is called the Bridge Resourcing Summer Salary Survey, yours truly finds it very odd that the ccieflyer.com domain name appears to be owned by Emmanuel Conde and not Bridge Resourcing.
--------------------------------------------------
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A CCIE provided yours truly with the following CCIE gossip:
"Dear Brad,"
"AT&T CCIE employees are leaving in droves."
"With the merger of AT&T and SBC, SBC has cut the bonus money that keep many CCIE’s at AT&T, (Base + up to $50k bonus)."
"So with a 33% or more cut in pay, they are leaving."
"As Cisco’s biggest VAR this causes a number of problems for Cisco and AT&T equipment sales."
--------------------------------------------------
Cisco declined to comment, while AT&T has not responded to a request for comment.
Related story: AT&T spending pullback hitting Cisco
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9 Year Worldwide CCIE Count by Region and Country:
View full-scale
9 Year Worldwide CCIE Count by Region and Country:
View full-scale
A senior CCIE provided yours truly with the above nine year worldwide CCIE count along with the following message:
"Brad,"
"I have been thinking."
"The numbers by themselves speak volumes."
"You only want to do businesses where there is a growing large number of CCIEs."
"Countries with low CCIE numbers are where you don’t have an infrastructure."
"The US is dropping simply because the rest of the world is attempting to get up to speed."
"What I do find interesting is this:"
"The CCIE Program is an individual program, a company might sponsor you, but it is up to the individual to attain the CCIE certification, no small feat."
"If you are going to attempt the CCIE you have to have a compelling reason, (market opportunity, etc.)"
"If you do attain your CCIE you must have a revenue source to maintain the CCIE, or why care to re-sit for the written exam every two years."
"Cisco is the worldwide leader in networking, second place is so far behind, well you get the picture."
"As the Internet grows, and we see Moore’s Law impact our global village more and more the winners and losers are in this chart."
"Countries that have an expanding CCIE population are going to be the winners in Moore’s Law."
"Look at China, but also look at Japan."
"Central America, South America, and Africa are not staying up."
"Look at the bad boy countries, and you will not see any CCIEs."
"Look at dictators or countries that are nationalizing their business and you see the drop again."
"The world is flat with opportunities everywhere, but more everywhere in countries with high growing CCIE counts."
"Cisco is very proud to publish every four months the total number of CCIEs worldwide."
"They don't provide a history, but they do present the current state of certified CCIEs."
"An interesting observation is Japan versus India."
"We hear about the growth in India, but is India actually building the infrastructure?"
"The history of CCIEs should tell the tale."
"The answer is no."
"As Japan moves to 100Mbps, so the number of CCIEs expands, supporting the growing IP infrastructure."
"If you have the IP pipes, the applications will come."
"The India numbers imply silos of economic opportunity, not national opportunities."
"The current invasion by Russia is another example of the new world order."
"Russia 284 CCIEs, Georgia 0."
"So your network will go down, because you don't have the people who know how to stop the simplest DoS attacks."
"Such easy fodder for Russia."
"Now think like Apple, what would you do with these numbers?"
"Build stores, market in countries with growing CCIEs."
"Microsoft, HP, IBM, bet with the CCIE growth."
"Cisco hates that this is published."
"If Microsoft published their MCSEs worldwide, I think the numbers would look the same."
"Now add Moore's Law."
"Where to bet that Moore's Law will have the largest impact?"
"The answer is follow the CCIE trends."
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