Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Ditech Networks Inc. (NASDAQ:DITC)

Q2 2008 Earnings Call

November 15, 2007 4:30 pm ET

Executives

Marie Nelson – VP Finance

Todd Simpson – President, CEO

Bill Tamblyn - CFO

Analysts

Michael Coady – B. Riley & Co.

Rohit Chopra – Wedbush Morgan

Joel Achramowicz – MDB Capital Group

Marcus Kupferschmidt – Lehman Brothers

[Santos Roul] – Broadpoint Capital

Operator

I would like to welcome everyone to the Ditech Networks second quarter fiscal year 2008 earnings release conference call. (Operator Instructions) I’d now like to turn the conference over to our host Vice President of Finance, Marie France Nelson. Please go ahead.

Marie Nelson

Thank you. Good afternoon everyone. Thank you for joining us for this conference call, which will cover Ditech Networks’ announcement of results for its fiscal 2008 second quarter ended October 31, 2007. Today’s conference all will cover our financial results for the quarter. We will also provide our outlook for the third quarter of fiscal 2008. Todd Simpson, Ditech’s President and CEO, will provide the business and strategic analysis and Bill Tamblyn, Ditech’s Chief Financial Officer, will provide a more detailed analysis on the financials.

Following these presentations, we will open up the call for Q&A. Before we begin, let me state that this conference call is being held on November 15, 2007. Any sound recording or republishing of the contents of this conference call is expressly forbidden without the written approval of Ditech Networks.

Also, we must point out that, as with similar presentations, the following discussion contains forward-looking statements and in particular the financial projections of our third fiscal quarter of 2008 that involves risks and uncertainties. Our actual results may differ materially from those discussed here. We will attempt to identify such forward-looking statements with qualifying words such as we intend, plan, believe, estimate or predict; or we may, could, or will, or other comparative language. Factors that could cause results to differ include factors discussed today at this conference call and in our press release today, as well as those detailed in the section entitled "future growth and operating results subject to risk" of Ditech's Form 10-Q for the period ended July 31, 2007 filed September 10, 2007 with the Securities and Exchange Commission. We assume no obligation to update these projections or other forward-looking statements.

Today's announcement was released over the wire this afternoon in the press release, and you may also read it at Ditech's Web site by going to the Investor Section of the site at www.DitechNetworks.com.

Non-GAAP financial measures will be discussed on the call and a reconciliation of GAAP and non-GAAP financial measures as disclosed in our press release of today, which is located at Ditech Network’s website. With that, I’d like to turn the call over to Todd to comment on the announcement and our strategy going forward. Todd?

Todd Simpson

Thanks Marie France, good afternoon everyone.

Two weeks ago we preannounced that we expected to report revenues of approximately $6.6 million in our Q2 and gave guidance to $5 to $8 million in revenues in Q3. Bill Tamblyn our CFO will give you more details on our final Q2 numbers to you in a few moments.

First, despite the last quarter, Ditech has some good opportunities in front of us and I would like to spend a few minutes on these.

Let me start by giving some details around Verizon Wireless. Our relationship with Verizon is strong and we have been doing business with them for many years. In fact, they have over $200 million worth of our Echo cancellation equipment in their 2G network. To our knowledge, the slowdown we have seen at Verizon is due only to their decrease in 2G Echo cancellation spending. We are not being replaced by another vendor.

Further within 3G networks, the need for acoustic Echo cancellation by our estimates is greater than ever. Acoustic Echo increases with the use of Blue Tooth headsets, small mobile phones and speaker phones, all of which are accelerating markets.

Our product for Verizon’s 3G voice application is based on our PDP platform utilizing both its IP interfaces and its signaling engines. No hardware changes are required. This is the same platform that is even now, being used to deploy our voice quality applications within other IP networks.

Further we have developed some new leading edge acoustic Echo cancellation algorithms for the 3G network, that go well beyond what we have done in the past and will have wide applicability beyond Verizon.

While Verizon spending on 2G Echo cancellation has obviously slowed, they as well as all operators that own 2G networks will need to maintain those networks for a long time. In some cases, where existing Echo cancellers are quite old, or can no longer handle the long delays that occur in hybrid networks, we may have more opportunities with our 2G products.

Our work with the second North American wireless company also continues. We remain actively engaged with a second large carrier and feel we are making good progress towards more business from them. Like all carriers right now, there is a mix of 2G and 3G potential. And the network evolution played in significant role in our market timing.

Importantly, this second North American carrier accepted our EXi measurement technology as a valid measurement methodology within the last quarter. This is an excellent step forward for us and further validates the importance of measuring the complete end-to-end user experience.

Also in our second quarter, we had some good traction internationally. We did some more work with Orascom Telecom in their mobinil network, which is jointly owned by Orange, part of the France Telecom Group. We also signed a master purchase agreement with a large operator in India and received some initial revenue from them. We anticipate more revenue from India this quarter and are highly focused on growing the opportunities there.

In terms of our IP products, we announced VSNL as our latest PVP customer in the last quarter. VSNL provides global connectivity and managed solutions to carriers and enterprises worldwide. This is a great win for us as VSNL is using the PVP for codec transcoding. Transcoding plays an important role in delivering high voice quality as the types of compression used in a network impact the overall quality. Having both transcoding and VQA available in the same platform, will become more and more compelling moving forward.

So in 2G, 3G and Voice-over-IP, we have significant opportunities and are actively engaged with many large players. We did make some progress in the last quarter and will be building on this going forward.

Now that said, our ability to close these big accounts and the timing associated with these deals has challenges. As outlined in our last call a few weeks ago, we have initiated several strategies to help with this.

Our EXi measurement product is today, tightly coupled to our platforms. As we want to raise awareness about the extent of voice quality issues in networks, we are extracting EXi into a stand alone software element. This will enable us to put EXi into more and more places within the network, thus raising visibility of voice quality issues. We ourselves have measured hundreds of millions of calls using EXi and this data clearly shows that significant voice quality issues occur on a quarter of all the calls we’ve measured.

Another effort we are undertaking is to get operators involved in using their own tools to measure our value to their network. Each operator measures and tracks customer satisfaction and customer acquisition differently. We believe that if they can measure the impact of our technology using their own methodologies, it will add further proof of our positive affect on subscribers.

To enable this, we need to be willing to install enough equipment in a network so that the operator can run a statistically significant measurement against us. We are willing to do this as long as the carrier will step up to measure our impact. In early discussions with several carriers, they are amenable to this approach. This in itself is a great sign for us. Installing us and measuring our impact is a significant effort on the part of the carrier.

Anecdotally, we find time and again, that once we deploy a system it very rarely gets taken out. Subscribers really appreciate what we do for their call experience and those within the operator who are close to the consumer, for example the switch operator or the customer service manager, see a difference in customer satisfaction.

In terms of channels, we will be working to distribute EXi more widely and will also look at other OEM, system integrator and other strategic ways to position and sell our voice quality products. Our belief is that we have some of the best voice quality technology available and that this technology can have significant value to many players in the communications industry.

None of these initiatives are trivial nor immediate; however we have confidence in their longer term impact. So despite our recent downturn in revenue, we remain upbeat about the future. We are highly engaged with carriers both here in North America and worldwide. We are continuing to enhance our products while also looking at more innovative ways to deliver and position them.

With that, let me hand the microphone over to Bill to look at the financials.

Bill Tamblyn

Thank you Todd.

I’d like to now share with you the final results of our second quarter of fiscal 2008 as well as our outlook for the third quarter of fiscal ’08.

Before doing so, let me comment on our approach to governance and SCC compliance. Please allow me to mention that, we have no off balance sheet entities or associations. We believe we have, to the best of our knowledge, disclosed all other obligations and related party transactions as required.

Our auditors do not perform consulting services for us such as systems review, IT reviews or other forms of consulting services other than tax compliance services. We comply with all effective SCC and NASDAQ requirements related to audit committee compliance and independence. We continue to adhere to [inaudible oxly] compliant requirements.

Our discussion today of our operating results will be on non-GAAP basis. Our press release posted on our web site includes the summary information from GAAP and related reconciliation for Q2.

The primary changes are severance and reorganization expenses of $1.6 million. The elimination of stock-based compensation FAS 123R, expenses of approximately $1.3 million, and amortization of purchased intangibles related to acquisitions of approximately $246,000 and the tax affects of these excluded amounts.

Our reorganization expense is due to our reduction in force that commenced in the quarterly period. We reduced head count by approximately 23% and with it incurred other related expenses. This was to reduce our operating expense but maintain critical mass to address go-forward opportunities based on our current revenue levels.

Moving on, the key points of the second quarter results on a non-GAAP basis as noted in our press release are as follows: revenues $6.6 million, non-GAAP gross margin 35.7%, non-GAAP loss from operations was $8.2 million, the non-GAAP net loss was $3.4 million, the non-GAAP diluted loss per share from continuing operations was $0.11 per share, revenues were as projected in our pre announcement.

The second quarter non-GAAP details are as follows: total revenue for the quarter was $6.6 million, down 53% from the prior quarter of $14 million and down from $21.1 million for the same quarter in fiscal 2007.

Q2 revenues were less than the projections we provided in our August call but were consistent with our pre announcement.

International revenues were $3.4 million or 52% of total revenue. We had four greater than 10% customers in Q2 and they approximated 66% of revenues.

Non-GAAP gross profit for the quarter was $2.4 million approximating 36.7% of revenues. This is due primarily to our absorption of manufacturing overheads and customer mix and revenue recognition on certain transaction.

Non-GAAP operating expenses were approximately $10.6 million for the quarter, approximately $500,000 less than our August projections. The details of the operating expenses by area are as follows: non-GAAP sales and marketing expense was $4.6 million. This was down from the prior quarter $4.7 million due to reduced rep fees on international sales, channel costs and staffing. The decrease was expected based on the revenue levels.

The non-GAAP R&D expenses were $4.2 million. This was down approximately 14% from the prior quarter and approximated our projection based on our continued investment in VOIP applications and sustaining engineering.

Non-GAAP G&A was $1.8 million, down approximately 14% from the prior quarter’s $2.1 million. This was expected based on audit and legal costs for year-end as well as CEO recruiting costs incurred in Q1.

Interest income approximated $1.5 million, down from the 1.7 in the prior quarter based on lower levels of cash, primarily resulting from us repurchasing $40 million of company stock through our Dutch auction.

Non-GAAP pre-tax operating loss was $6.7 million. The non-GAAP income taxes was a benefit of approximately 50%, was higher than we had projected based on our loss and expected R&D tax credits.

Our non-GAAP net loss was $3.4 million, which is $0.11 per share compared with a $100,000 or $0.00 per share in the prior quarter.

To reiterate, all the operating results I’ve just given you are on a non-GAAP basis. Please refer to our press releases for the first and second quarters of fiscal 2007 which are located on our web site for the comparative GAAP results as well as the reconciliations of the non-GAAP results to our GAAP results.

Moving on to the balance sheet and cash flows, which are on a GAAP basis, cash equivalents and short term investments at quarter end totaled $69.4 million. This was lower than our prior projections based on the $40 million in a Dutch tender buyback and moving almost $9 million to long term investments.

Total cash did approximate $79 million. Cash used in operations was approximately $3.2 million for the quarter. This was higher than our expectations and primarily tied to our losses based on the revenue shortfall.

At quarter end, accounts receivable were approximately $3.2 million. This was a $4.8 million decrease from the prior quarter. DSOs in the second quarter approximate our long term expectations at approximately 45 days compared to 50 days in the last quarter.

As we stated last quarter, we would expect our long term target to be approximately 45 to 55 days and let me emphasize that our DSO numbers are subject to change. The timing of sales and shipments in any given quarter is always subject to fluctuation.

Our net inventories were approximately $18.6 million at quarter end, up approximately $300,000 from the prior quarter of $18.3 million. This flat inventory balance was primarily due to having inventory flows from our contract manufacturers slowing and shipping most of our revenues from stock. These inventories are the principal products we are selling and we believe will be sold during the next several quarters. We believe there is no obsolescence issue at this time.

Gross deferred revenues at October 31st approximated $4.8 million, up $1.6 million from our prior quarter of $3.2 million.

Capital spending approximated $425,000 in the quarter. Depreciation and amortization approximated $625,000 in the quarter.

We ended the quarter with 186 employees. This is down from 219 at the end of the prior quarter. As of today, we are at approximately 166 as we completed our reduction in force late in the quarter and a large number of employees ended their employment with us on or about November 2nd.

I will now review our GAAP projections for the third quarter fiscal 2008. In this regard please note the cautionary statements regarding these forward-looking statements that we gave at the beginning of the call.

Our Q3 outlook is derived from existing backlog, deferred revenues and our bookings forecast. It’s also consistent with our pre announcement projections that we made earlier this month. Therefore we project our revenues to approximately $5 to $8 million. We believe gross margins will approximate the 50% range based on product and customer mix differences and revenue level that will absorb costs on lower revenues.

Regarding operating expense, we are continuing to invest in our TDM and packet platform businesses to support current opportunities. Operating expense in the third quarter will tied to customer and channel mix, including agent rep fees on international revenues.

Overall, we would expect our GAAP operating expenses including an estimated $1.5 million of stock-based compensation and acquisition related expenses to decrease to approximately $10.2 to $10.5 million. This is down from the Q2 level of $13.7 million.

Our annualized tax benefit rate should continue in the third quarter based on our Q2 levels, and our projections it’s to be approximately 46%.

Deferred revenues at the end of Q3 are expected to approximate Q2 ending levels at $4.8 million.

Additionally, a couple of other data points for you, weighted average shares should continue to be calculated on a basic basis due to our losses and approximate 26 million shares.

Cash flows from operations which presume [utilizations] of inventory from current levels should decline $3 to $5 million from Q2 levels. We did complete our Dutch auction for $40 million and any additional buyback will be based on the Board’s discretion.

Cash at the end of Q3 should be in the range of $74 to $76 million.

Looking at Q2 as a whole, we were disappointed in our major customer revenue decline and in not closing some of our other opportunities to offset the decrease in our major customer. In looking at Q3, we still have short term concerns on transaction timing, which we addressed in our projections. However, we are encouraged by the funnel of activity in domestic and international wireless as well as the VOIP area.

Looking forward, we will look at methods to push and close business opportunities. Additionally we did look at cost structure to support a lower revenue level at the present time and will continue to monitor our situation.

With that, I’ll turn it back over to Todd.

Todd Simpson

Thanks Bill. Operator we could open the line to questions now.

Question-and-Answer Session

Operator

Our first question will come from the line of Michael Coady – B. Riley & Co.

Michael Coady – B. Riley & Co.

Thanks, good afternoon. Thanks for the detailed analysis Bill; you answered a lot of my questions in your prepared remarks. Could you talk about the visibility and to the Q3 revenue in terms of the mix from where it stands now versus what your expectations are particularly international and the second major carrier?

Todd Simpson

Yeah Michael, in general terms I think we can see the mix to be fairly similar to what we’ve seen over the past couple of quarters in terms of the international to domestic mix. And again, as we mentioned with our second major customer here in the U.S., we’re continuing to make progress but aren’t getting a specific projection right now and what percentage of our revenue that will be over the next little while.

Michael Coady – B. Riley & Co.

Okay, and Todd regarding a second major customer, they’ve been, they’re open to EXi or they’ve accepted the results of EXi, could you provide a little bit more detail on that, I didn’t catch exactly what you said and what the implications of that are.

Todd Simpson

Sure, so EXi as you know, is a measurement of voice quality impairments in the network. And in the last quarter, they put EXi through its paces and calibration procedure and what not and have sort of formally accepted it as a valid measure of the voice quality issues in the network. So it’s essentially saying that they believe the EXi results.

Michael Coady – B. Riley & Co.

Okay, that’s encouraging. Bill, you mentioned that you expect gross margin of approximately 50%, in the press release it says 40 to 50%, could you provide a clarification there please?

Bill Tamblyn

The 50% I gave is based on the range of scenarios. The press release, yes does say 40 to 50, but I believe it will be based on the channels and mix. We have a couple of transactions that based on rev rec, if we achieve them because we’ve recognized more cost in let’s say the second quarter; we will have a greater amount of gross margin in the third quarter. So there’s some transaction, so I believe it’ll be more along the 50% line.

Michael Coady – B. Riley & Co.

Okay thanks, and I’ll just one more and jump back in the queue. The binary event that was talked about previously, is there any more visibility into that?

Todd Simpson

Yeah, thanks Michael, no there are no further visibility. We still expect to get something definitive within the next few months, but don’t have exact timing on that.

Michael Coady – B. Riley & Co.

Okay, thanks and good luck.

Operator

Your next question will come from the line of Rohit Chopro – Wedbush Morgan

Rohit Chopro – Wedbush Morgan

Sorry, I just had a couple of questions. I just wanted to get an idea of what, maybe just an estimate, of what maintenance revenue is now. I know you have a lot of equipment in the field and it is true that most people will take a long time to replace this equipment and is there any way to extract any more maintenance revenue out of some of the companies that you sold a lot of product to.

Bill Tamblyn

We have a portion of our revenue is tied to annual software maintenance, so more of the newer products, especially the VOIP as well as some of the international, so there was a portion of our revenues there. We do have some maintenance agreements with some of the customers who have bought significant revenues in the past. We will disclose those when they become more material. Right now they’re not material to the overall revenue picture. They are becoming more prevalent and as we have moved over the last couple of years, we’ve moved to pressing to more of this annual software maintenance. So every deal now that we move forward, we’re putting a software maintenance on it as our products are becoming more and more intensive with our DSP [algorithms] such so therefore, a portion is. So I would say, it’s not material yet, but there is a reasonable component in our revenues of these type of maintenances. We also will continue to press, yes the people in the past that we’ve sold a lot, such as we at one point sold a significant amount to Quest, we sold to other people in the past. And we will continue to press them as their product that they have is in excess of five years of age. So there is discussions in that path.

Rohit Chopro – Wedbush Morgan

And just to follow up on that, on the EXi product, is there a lot of maintenance involved, that there’s a lot of software involved in that product, and could there be some good recurring revenue built into that as well?

Bill Tamblyn

We’re continuing to look at the opportunities for the EXi. We’re fairly new in separating it out as a software component and getting it into the market. But certainly yeah, top of mind would be getting some recurring revenue and some revenue out of it. Also to help our big picture lumpiness, the more recurring revenue we can get the better we are.

Rohit Chopro – Wedbush Morgan

Right, and then I had one last question and it comes back to your expertise and where you came from, but is there anything that you can do on the [SDC] market, you know, using your past experience, is there anything there where you can sort of bring that back to life and generate some revenue on that side? The Session Board of Control and Market.

Todd Simpson

Right, I think we’ve said before that we have no intention of going head-to-head with an [acme] packet in the Session Board of Control or Market directly. Now that said, our packet voice processor sits in the IP network quite often at the edge of the network and there’s certainly more value we can add to the packet voice processor for specific applications. Both in terms of its signaling functions and as well as its media processing functions. So I hope that’s clear. We don’t intend to go straight into the SBC market but certainly as the signaling functions move throughout the network, we have opportunity.

Rohit Chopro – Wedbush Morgan

Sure I understand. Well good luck, I appreciate it.

Operator

Your next question will come from the line of Joel Achramowicz – MDB Capital Group

Joel Achramowicz – MDB Capital Group

Thank you very much, good afternoon gentlemen. I was wondering Bill and Todd if you had any visibility at all into the latter quarter of the second half; the fourth quarter at all, any visibility at all as to whether there might be a comparable run rate for the fourth quarter similar to your range for the third quarter. Or whether there might be some incremental step there that you can already see emerging.

Todd Simpson

Joel, I think we typically don’t give guidance out that far and I think we’ll stick to that in this case in that we just don’t have enough visibility to tell you with any accuracy at this point in time that far out. But you know obviously, we said a lot of things here about some high potential opportunities in front of us, and should we be able to get some [trouch] in with some of these new initiatives that would bring some of those to closure, then certainly there’s the potential there.

Joel Achramowicz – MDB Capital Group

But, let me rephrase the question, how would you feel about, I mean, hoisting a top line in the fourth quarter of $5 million. I mean what would your thoughts be with regard to that?

Todd Simpson

I think we would be quite disappointed and I think we have more opportunity than is visible there but you know, at this point in time going beyond that again, we remain optimistic because we do have these large opportunities, but we obviously are fighting timing issues to bring some of these big opportunities to closure. And so same with any specificity that we would get them to closure within Q4, we just can’t see that far out right now.

Joel Achramowicz – MDB Capital Group

Fair enough. How do you feel about the VOIP market in particular, either domestically, internationally or overall? Do you have an emerging funnel of business in that area aside from your large positions in the major mobile carriers?

Todd Simpson

Yeah, I think in general, we could say that we have better funnels and more opportunities than ever within the VOIP space for the product and that we’re encouraged certainly by that and expect that to continue growing of course as the VOIP both on the access side as well on the peering side continues to grow. So, yeah I think we have very healthy funnels again, within the IP space just as within our traditional space. We have to bring those deals to closure and start getting traction in some of them.

Joel Achramowicz – MDB Capital Group

As you mentioned in the split off of EXi, are you going to charter the management with really driving that program independently or do you see it strictly mainly as a feeder for prospect development and sales potential as a way to basically develop lead potential among the PDP.

Todd Simpson

We see it primarily as a way to drive our VQA platforms into the market. With that said, we do believe it has a value on it’s own in that it’s an exceptionally accurate measurement of voice quality issues and there’s a lot of interest in that simply as a measurement component. So we think it has independent value but our primary focus is to drive our platform sales.

Joel Achramowicz – MDB Capital Group

Very good and perhaps just two more questions on the financials. Bill, what kind of a tax rate should we use or benefit basis for…

Bill Tamblyn

Our take on Q3 and probably into Q4 would be somewhere in the 46% rate currently.

Joel Achramowicz – MDB Capital Group

You had mentioned before about you know a buy back program after the Dutch auction. I know you mentioned it’s up to the advice of the Board, but any thoughts on you’re take on that, whether it would seem this would be a good time to just at the very least, with the $80 million in cash on the books, continue to chip away with the stock at cash.

Bill Tamblyn

Duly noted. We bought back at the tender $40 million at $5.50, I know we’re trading down now closer to cash value. But ultimately that’s a Board call. We also are burning at this juncture at about $3 to $5 million this potential next quarter so; all those things will have to be weighed by the Board to make their decision on what we should do with the cash. But I hear your point, but ultimately that’ll be a Board call at some point from today.

Joel Achramowicz – MDB Capital Group

Well we’ll be watching and good luck going forward.

Operator

Your next question will come from the line of Marcus Kupferschmidt – Lehman Brothers

Marcus Kupferschmidt – Lehman Brothers

Hi guys, I guess maybe you could just give us an indication of kind of customer activity, maybe kind of more forward looking and how is quoting activity coming along and how receptive do your customers seem at this point and maybe you could just kind of comment on that.

Todd Simpson

Sure, I guess again just in general terms Marcus, we stated in the last call that we did go though a cost reduction exercise last quarter but we were very cognizant that we have enough good opportunities in the funnel that we feel positive about, that we definitely didn’t want to impact our ability to execute and I think that’s a great indicator that we are highly engaged with lots of customers. I don’t engagement is our major issue. I think it is getting to closure on product sales and penetration into the customers and obviously that’s where we’re highly focused right now.

Marcus Kupferschmidt – Lehman Brothers

And with regard to the operating expense guidance for next quarter, I’m not sure if I missed something but did you guys give a more of an explicit number or did you leave it more general depending on the agent rep fees for international revenues.

Bill Tamblyn

No we gave a target that the GAAP would be about 10 2 to 10 5 thereabouts. Included in that is approximately a million and a half of FAS 123 and purchased intangibles. So that’s the ballpark. It could vary, obviously a little bit off that, but that’s sort of the range assuming your revenue range could vary, as well as the mix. It’s more agent versus rep so there’s a range.

Marcus Kupferschmidt – Lehman Brothers

And I realize that there’s been some significant restructuring and some cost cutting that’s happened, I guess if revenues stay flush and maybe grow moderately, do you see any more actions on the horizon that you might take, trying to take some more expenses out?

Todd Simpson

Well I think, just based on good governance and good management we will make those decisions as we go forward and I think we’ve made those decisions as well as we can at this point in time. Again, given the fact that we do have some big opportunities in the funnel that we don’t want to not be able to execute on if and when they come through.

Marcus Kupferschmidt – Lehman Brothers

Okay, thanks a lot guys.

Operator

Your next question will come from the line of [Santos Roul] – Broadpoint Capital

[Santos Roul] – Broadpoint Capital

Alright thank you, just a quick question, can you talk a little bit about the VSNLs opportunity. How big could that be and exactly when do you think meaningful revenues will come in.

Todd Simpson

So just in general terms, obviously VSNL is a big entity with lots of different pieces and we’re currently working with one of the entities on our codec transcoding application and so the scale with which we grow with them is dependent on how fast they grow their Voice-over-IP business and how impactful we are in their network going forward. So certainly there’s lots of opportunity there. We’re very happy to have a foot in the door and our expectation is to grow with their VOIP deployments.

[Santos Roul] – Broadpoint Capital

Any idea of the dollar amount, roughly in terms of just kind of general idea how big it can get down the road?

Todd Simpson

Again, obviously there are [unintelligible] so there’s potential there but we wouldn’t say anything specific about our potential there right now.

[Santos Roul] – Broadpoint Capital

Any other carriers in India looking at it as well?

Todd Simpson

We did announce another master purchase agreement with the carrier in India that we did some revenue with, and we’ll continue to push hard there.

[Santos Roul] – Broadpoint Capital

Alright, thank you.

Operator

And there are no further questions from the phone lines at this time, please continue.

Todd Simpson

Alright well with that, we’d like to thank everyone for joining us this afternoon and we look forward to talking to you again next quarter. Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Ditech Networks F2Q08 (10/31/07) Earnings Call Transcript
This Transcript
All Transcripts