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| Q1. What business is NeoWave currently involved in? |
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NeoWave, Inc. was founded in 1998 specializing in the design, manufacture and supply of the subscriber access
and fiber optics transmission equipment/system.
Since then, we have made a remarkable growth in which we have extended our products portfolio significantly
to the extent of covering not only the entire wireline and wireless access network market
but also the fiber optics metro backbone network and microwave rural branch network markets.
As to the access network business in particular, our current products portfolio covers the dedicated line,
high speed Internet, fiber optics Internet, voice/data integration, and Ethernet access.
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| Q2. How does NeoWave evaluate the market situation current and future? |
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Korea as one of the high speed Internet fore runners has been making lots of rapid investments in the telecommunications infrastructure resulting in the excess of the network capacity to some extent.
In light of balancing the growth between the network capacity and the number of subscribers,
the service providers are slowing down procurements of the network equipment thus aggravating competitions among the network equipment manufacturers and suppliers.
This leads to aggravation of the revenue and profitability for the network equipment suppliers, upon which some of them have been hard hit by financial difficulties.
The high speed Internet subscribers are growing rapidly in China, the U.K., and France, whereas the subscriber growth is becoming stagnant In Korea, and Japan thereby triggering the service quality/versatility competitions among the service providers in these countries.
In case of Korea, the service providers have begun changing their strategy so that they could focus on the growth in the average revenue per user (ARPU) than on the growth in the number of subscribers.
As to the future of the network equipment/systems market, the network industry will be migrating faster than expected to the stage of requiring an integration of the TV broadcasting and Telecom services into a single network platform along with enhancement in the mobility/intelligence/personalization of the IT applications.
The broadband content business for DTV and HDTV is also expected to become active thereby providing for the market for the broadband subscriber access network equipment/systems.
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| Q3. What are the core competencies of NeoWave that differentiate from competitors? |
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NeoWave focuses on the following 3 factors be differentiated from competitors.
1. Continuous R&D investment
More than 50% of the NeoWave employees are directly involved in R&D, in which the company invests 10%~15% of the annual revenue each and every year.
This continuous R&D investment is already paying off that NeoWave is being recognized among the network equipment/systems suppliers for its technological
excellency in terms of generating the new ideas as well as commercializing the new technologies.
2. Fast time-to-market
NeoWave emphasizes the philosophy of "Foresee in advance, Act in advance"
in order to win over the competitions, which campaigns to the employees in terms of " forecasts in two steps ahead,
R&D in one step ahead, product development in at least half a step ahead" toward customer satisfaction
and the resulting competitive edge. All these translate into NeoWave¡¯s strong determination to read the market in advance, prepare for the market in advance, and thereby lead the industry.
3. Market adaptation
Lots of manufacturers/suppliers went into the access network business encouraged by the booming market
some years back. Many of them have gone out of business due to excessive price competition even at below the cost.
The market has been so slowing down that big conglomerates have eliminated the access network equipment/systems
supply business from their cash cow business list. The market has been changing to require for shorter R&D cycle
and shorter product development cycle as well as for small quantity but wider list of the products portfolio.
NeoWave has well responded to all these changes thus adapting to the market in a timely and flexible manner,
such that NeoWave has secured and maintains the market leader¡¯s position in the access network business area.
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| Q4. What business is NeoWave planning for as the next generation major business? |
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NeoWave has been focusing on Telco business up to now supplying the subscriber access
and fiber optics transmission equipment/systems as a major thrust business.
NeoWave pursues stable and continuous growth, for which actions are being taken to add the customers list
and the products list and the products list as well. Regarding adding the customers list, NeoWave is in the process of establishing strategic alliance
with the world premiere telecommunications manufacturers/suppliers in order to expand
and diversify the markets on-shore and off-shore, along with globalizing the business operation.
NeoWave is adding the product lines with the FTTx solution, VDSL, and NG-RF to the current cash cow of the subscriber access and fiber optics transmission.
NeoWave is reviewing the feasibility of the multimedia content business in preparation for a merge between telecommunications and TV broadcasting
in the near future. In the mean time, in terms of maintaining a stable revenue, NeoWave will keep investing in R&D for the next generation FLC, xDSL,
and IP associated product lines as a core Telco business,
while keep pursuing the microwave rural branch network business as well as the fiber optics metro backbone network business.
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| Q5. What are the major product lines that NeoWave supplies as of now ? |
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NeoWave secured a foothold for growth by developing on its own and as well as selling FLC-D and MSDSL.
The FLC-D is a medium capacity subscriber access and fiber optics transmission system supporting
both the data and voice communications and has been sold to Korean major service providers.
The MSDSL is the Internet access product line that NeoWave has developed toward maximizing
the efficiency of the DSL service.
At present, the major product lines that NeoWave sells are the FM-200
as a small capacity subscriber access and fiber optics transmission system that currently dominates the market,
IDLC-MUX as an integrated system to be deployed in the Central Office, and the fiber optics metro backbone network system to be deployed in the major cities as the lower hierarchy drops from the country wide long haul backbone network.
In addition, NeoWave has also developed the NetMate and the EtherMate product lines providing a conspicuous R&D capability in this area of the technology in Korea.
The NetMate is a new Internet access product line to be sold domestically as the next generation fiber optics DSLAM
and to the overseas market as the next generation integrated DSLAM in order to support various Internet access inclusive of ADLS, ISDN, Modem, etc.
The EtherMate is an Ethernet access fiber optics subscriber system that integrates the Router, Ethernet switch
and Fiber optics transmission functionalities into a single platform thereby enabling the Ethernet-to-the- Home (ETTH) service.
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Q6. Who are the major customers for NeoWave, and what future marketing strategy
does NeoWave have? |
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NeoWave is specialized in the subscriber access and fiber optics transmission systems business,
and as such the major customers are naturally the telecommunications service providers in Korea.
However, Korean transmission systems market is almost matured resulting from much aggressive investments
in the transmission infrastructure over the past few years thus is getting less attractive to the transmission systems suppliers.
This change of the market environments encourages NeoWave to develop the overseas market to export the systems/equipment to China, Japan, the U.S.A., and Europe.
Considering the brand name recognition of NeoWave in the overseas market comparing to that in the local market,
NeoWave plans to pursue strategic alliance with premiere world-class suppliers toward extending the market to the overseas along with globalizing the operation.
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| Q7. How is the competitive edge of the NeoWave price and quality? |
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NeoWave has so far been maintaining sound and stable operation generating profits every year except for the year 2001.
The year 2001 was a specific year, in which the world economy was sliding down while the IT business was absolutely in slack.
In the year 2002 in particular when most of the IT involved venture companies were suffering from serious deficit,
NeoWave was making lots of profit from selling aggressively the FM200 system and 10Gbps WDM fiber optics transmission system far above the objective thereby positioning the company for a great leap forward.
Getting back to the access network equipment/systems business, a lot of manufacturers and suppliers entered into the business based on a once booming market for a couple of years in the past but most of them have ended up going out of business as of now.
On the contrary, NeoWave has been performing well achieving steady growth year by year in revenue and profitability thus resulting in securing the market leader¡¯s position in this sector of the business as of now.
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| Q8. What are the recent sales revenue and the future prospects? |
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As
of the end of 2004, NeoWave has sold Korean Won
32.4 billion, the yearly cumulative, which is
a 37% (Korean Won 8.8 billion) growth from the
same period last year. NeoWave feels comfortable
to achieve Korean Won 44.4 billion or above in
terms of year 2005 sales total. The significant
sales increase this year owes to stable increase
in the sale of the major product lines as well
as a new market generation for the replacement
equipment/systems sales.
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| Q9. How are the major financial indicators of NeoWave such as liquidity ratio, stability ratio, etc? |
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NeoWave
is a financially in superior position to competitors
in terms of liquidity and stability due to significant
increase in revenue, net profit and cash reserve
in 2004. Getting to some more details, in terms
of the first half of the 2004 cumulative, debt
ratio stays at 30% (3% improvement comparing to
the same period last year), liquidity ratio at
457%, and leverage ratio at 7%. All these numbers
prove that NeoWave is currently staying in the
highest financial position among the suppliers/manufacturers
in the access network business.
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| Q10. How much is NeoWave investing in R&D annually? |
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NeoWave
invests in R&D at about 15% of the revenue per
annum as well as maintaining over 50% of the total
employees to be the R&D staffers. In 2005, NeoWave
is expected to spend Korean Won 4 billion for
R&D.
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