Sonoma County: News and Notes

First, I hope to see many of you either tomorrow at the YPN Professional Day or next week at the Santa Rosa Chamber’s Business Showcase. I will be there at both events and look forward to talking to new friends and old.

It is that time of the quarter again and my friends at Calix reported their earnings yesterday. The earnings themselves were rather straightforward. They had revenue of $91M, up from $86M in Q1 last year. They lost money this quarter to the tune of $0.07 a share on a non-GAAP basis. I am not going to use the GAAP numbers as they are not more meaningful for shareholders.

The stock is down about 10% this morning. The results themselves would not drive this behavior. There was modest year over year growth and Gross Margin took a nice uptick. The problem was the conference call. There is a transcript for the call on the Calix Investor Relations site, in case you wish to read it. So, what is problematic about the call: Guidance for Q2 is slightly down year over year plus Operating Expenses are up dramatically year over year (well above 10%) plus the company announced a Stock Buyback. The company announced it saw a significantly bigger second half of the year but provided no logical basis for that commentary. On top of that, International Revenue was slightly down year over year.

So, what does all that mean? Let’s start with the Buyback. This is a reasonable way for a company like Calix to give value back to the Shareholders. It can’t really do a regular dividend, and it is signaling that it does not need cash to buy anything. The choices left to it are limited. One thing would be to do a 1 time dividend. At $40M (the size of the Buyback), that would be about $0.80 a share. But the Buyback has an advantage. It is not mandatory like a Dividend. It simply allows the company to buy shares if it thinks this is a good idea. This means on a day like today it can buy some to support the stock price. But if things go well, they can just do nothing. There is also a psychological signal that the company feels it is undervalued and the stock is a good buy. This also helps keep the stock price up.

The real problem lies with the uptick in Operating Expenses (OPEX). The announcement said essentially, “We are investing more in the business and we don’t have anything immediate to show for it. Trust us it will be better in the future.” The problem is that the last two future plans have not worked out to what the company intimated. That would be International and Broadband Stimulus. On the International front, business was flat year over year and no growth has been seen since the initiative was announced. The company said that it was essentially done with Broadband Stimulus projects, and that has not provided an uptick either. So, the analysts and investors are asking what is different this time?

The problem is that the answer to that question is not obvious. To grow the company significantly, there will need to be a large uptick in some customers or some significant new customers. The only thing that is obvious on the horizon is the sale of lines from Verizon to Frontier (a non-Calix customer to a Calix customer) announced earlier this year. It is not clear to me that this is not more of a challenge than an aid. These new lines come from FiOS heavy properties and Alcatel-Lucent will instantly become a significant competitor in Frontier. There are likely to be some good rural upgrades, but these will be split with Adtran. So, probably good but later and maybe problematic.

The newer technologies (Next Generation PON and G.fast) don’t seem like they are going to be entry points into new customers either. All the competitors domestically and internationally have planned products in these spaces as well. So it is not clear that these technologies will be ways into new customers.

That wraps it up. Company spending more and risk into the future has increased. That is why the stock is down. But Calix will soldier on. It will be around for quite awhile, but I suspect Management will be under pressure in the near future to deliver on some growth results. If there is not a big uptick in the 2nd half, then expect the CEO to come under increasing pressure.

Have a great day and again hope to see you over the next week or so!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

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Your Brand Message: Ads and Targeting

So, last week I asked the question if the Boutique Customers for your specialized (Boutique) products and services look for them in the same place as the General Customer.

This is one of the big advantages of the Boutique Brand. The more specific of an audience you are addressing the easier they are to promote your products and services to. They will generally have some very particular ways that they search for vendors. By marketing your products and services in these venues then you will most directly connect to your customers. By placing your Branding Message in front of the people that are most likely to buy your products than you have done the best that you can in generating interest and leads for your business.

What this means is that you are wasting as little resources as you can on prospects who are not likely purchasers. There is an old adage that “50% of your advertising spend is wasted, the problem is you can’t tell which 50% it is.” Well, here we are trying to minimize that waste. This is important because Lead Generation is the most expensive activity in Marketing to grow. It is much less expensive to improve your Lead Conversion (the percentage of Leads that become Customers). But this focus also improves your Lead Conversion as you are generating leads for your business that are more likely to be buyers.

This leads us back to our Brand Message. Take a look at your Marketing Materials and Advertisements and make sure that they are aligned with Your Brand Message. If you remember Your Brand Message is the promise made to a prospect. So your advertising placement needs to align with the values of Your Brand Message. You want to ensure alignment to make sure that your prospects get a consistent message.

Finally, we need to talk about pricing and discounting. If you are executing a Boutique Brand, then you need to be above average on pricing. This is because you will have targeted a portion of the market that you are satisfying completely. They will end up desiring your products as they are the best fit. Which leads us to discounting. Don’t do coupons. If you want to discount, then see if there is a partner program that you can create. This way you can adjust pricing to customers if you want, but keep that discounting in an one on one format. So, you can discount – just don’t go into broadcast mode with it.
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Sonoma County: News and Notes

Wow, it has been a crazy couple of weeks for me. I am just about back onto a normal schedule. I had a client that wanted me to do a project that was full time just for them. I didn’t disrupt my current client schedules so I ended up with a couple of weeks of 60+ hours. Blogging became the thing at the bottom. Then I had a couple of hiccups with WordPress. For my readers, I started on WordPress but also use LinkedIn and my Website. The WordPress issues are resolved and I should be back on a normal schedule.

I have booths at both the upcoming YPN Professional Development Day (4/30) and the Santa Rosa Business Showcase (5/7). Stop by and say hi!

This week I want to talk about one of the pressure points of the local economy – Water. It looks like Real Estate should loosen up “soon”, but the drought will add a lot of pressure to us here in Sonoma County. The Wineries, Vineyards, Breweries, Distilleries and Food Manufacturers are all businesses heavily dependent upon water. If the drought continues, it is going to put pressure on those businesses.

To me the question is what can each of us do about it? Simply put, we can take a look at our water usage both in our businesses and in our personal life. In our personal life, the easiest thing to look at is Landscaping. There are many fine Landscapers in town that can put in Xeriscape and other lower water usage Landscaping. This can be true in our Business Life as well. I know that Carolyn Pistone at Clear Blue Commercial Property Management would love to help you with that.

Beyond that, you can look into Grey Water recovery. I was at a presentation where the Ice Rink at the Schulz Museum lowered their water consumption dramatically by working at it. I thought about that while was at the gym the other day. They do lots of laundry and the showers are used heavily. I have suggested to them to look into it. Is there something your business can do to cut water usage?

I am going to be offering a new Online Program called the Green Belt Business Mastery Course starting May 7th. The target audience for this is businesses that would like to have a Business Coach but feel unable to afford 1 on 1 coaching. This is the first in a series of courses running from Green Belt to Black Belt as well as some specialty Black Belt Classes. If you are interested or know someone who might be, feel free to contact me at jsackman@focalpointcoaching.com for more information. You can also find HERE a document that shows the curriculum for the Green Belt!

Just a reminder if you are interested in visiting a great BNI group come visit us at Legends at the Bennett Valley Golf Course on Fridays just before 7AM. The “Best Networkers In Town” would be happy to have you visit. Great way to meet around 40 Business People here in Sonoma County. If you want any other information about this let me know. We provide Breakfast and you get to meet 40+ Business Owners. Ask yourself: If I do business with just one of those people, how much revenue can I make. You can find the group HERE!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Your Branding Message: The Boutique Brand

As I posted last time in the series, I recommend most companies that are trying to move out of the bad quadrant to becoming a Boutique Brand. Once I get people past the problem of not having as broad an audience as possible, they get comfortable with the move.

The first thing that I have to go over with folks in this position is how to get out of the low pricing that they have done in the past without upsetting any existing customers. I ask them to do two things. The first thing is to make sure that services are all enumerated on any invoices, even if they are going to be discounted to zero. This makes sure that existing customers understand that they have been getting a discounted price and they have gotten a lot more value than they paid for. In order to make this look more normal, I suggest a “Partner Program”. This way existing customers can be defined as Partners and the discounts can be defined. You can use that same Partner Discount if you want in the future if you want. This way these customers see retail price and understand they are getting a good deal. The point of these activities is to get the pricing built to match the value and not discounted to the bottom.

After that, we begin working on how to define their unique value and ideal client. There is generally another round of nervousness when we go back to ideal client. I have to fight the desire to back to a broad definition of ideal customers. But past that, we get into defining their unique value. One of the challenges that I have to remind customers about is that this is about Branding. The message that I drive relentlessly is that your Brand is “Your Brand is your Unique Value Proposition in the eyes of your Ideal Client.” The biggest challenge that I find is keeping people focused on the viewpoint of the Client. Many people don’t easily reformat their thinking to take a client viewpoint. Once we go around all of this a couple of times, it is time to reformat their Business Plan based on this new methodology.

The change in Business Plan needs to reflect the changes in the number of clients that a Boutique Brand will have and the profit from each of them. This is going to be very different than the plan that would be used for low value transactions. This is especially true of Advertising expenditures. We will talk about the materials around this in the future. But one thing to think about is that now you are talking about a very specialized audience. Do they find their vendors in the same place as the more general audience?

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

Net Neutrality Friday

This week I want to touch on something that went on this week in the world of telecom.

This is the proposed merger of Nokia and Alcatel-Lucent. Nokia has come a long way on a changing road over the last couple of years. They had separated their communications equipment business and combined it with the similar business of Siemens to form Nokia-Siemens Networks or NSN. This made Nokia a handset maker primarily. They later sold the handset business to Microsoft and bought the totality of NSN to build a new Nokia. Now, there is a proposed merger of with Alcatel-Lucent (ALU). ALU came about as a merger between Alcatel and Lucent some time back.

All of these businesses have had a significant set of problems over the last few years and I want to provide some insight onto what is going on. The customers are going through a phase of taking control of purchasing power. There were many vendors supplying competitive equipment in the market. As things have standardized in implementation these vendors have become less differentiated. This is largely due to the huge cost to develop products, particularly if custom silicon is involved. To limit the possibilities of investing in equipment that does not become a big revenue winner, equipment companies have standardized their architectures. This means that a product from Cisco is not greatly different than a product from Nokia is not greatly different than a product from Huawei. This makes price the only factor.

On top of this, the customers have changed their buying behavior. In the past (say 10+ years ago), networks were relatively static and generations of equipment that did the same job were build and put into networks over time. Now networks are being changed rapidly and the winners at the start of the purchasing cycle win huge shares of the business and the rest are losers.

This is driving the vendors to be either huge, diversified vendors or smaller specialist vendors. The combined Nokia/Alcatel-Lucent will be one of those huge vendors. A company like Cyan Optics (who I will cover soon in my Q1 conference call review) is a specialist vendor. This is very similar to the way the passenger jet business is operating with two huge vendors (Boeing and Airbus) and some smaller vendors (Bombardier as an example).

What does this mean for the consumer and their broadband pipe? It means that innovation at the hardware level is very slow if not dead in the water. Any changes are going to come at a software level on top of more standardized hardware. This fits well into the Network Function Virtualization (NFV) model where applications are run on top of Commericial Off The Shelf (COTS) hardware. Today, that means x86 based servers. I suspect in the future that some kind of Ethernet Switching will be created as well for this model.

Have a great weekend!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!

 

Leadership in a New Situation: Dealing with Compliance

 

Last week I talked about trying recruit a person that is a detractor about the changes that you are trying to make. This week I want to talk about Compliance and Commitment.

The two terms here refer to people and the level at which they view their obligations on a job. People in Compliance will do what is asked. They will perform their work as best they can. Another way to say it is that they will give it a “Good Old College Try”. Commitment is a different level all together. A person that is Commited will find a way through. As a Leader, you want to move people into Commitment with your plans and your Leadership.

As you came into this new group, you are not likely to have Commitment from anyone. You may not even have Compliance from some people. That is the entire point of the early win. You need to get as many people as you can into Compliance and perhaps some into Commitment. By focusing on someone that is far from Commitment and changing their view, you have provided a model for others. This is a good start.

So what do you do now? Keep a level of focus. You will never please everyone. You are not likely to get everyone to Commitment. But that will be your goal. Some people will move in and out of Commitment. That is all very natural. The best way to keep people moving with you is to keep moving and focusing on things that are important. In Sales, this is a technique called “Land and Expand”. In Leadership, now that you have conquered the first thing. Now you need to build a bigger list of things to work on. This list will have items that will take longer to fix. Your list will now have things from your peers and your subordinates. But you need to keep your active list small 3 – 5 items.

With that list you make your plans and put measurements in place. Then you can create a Dashboard that measures progress against your goals. To have a formal set of measurements and a way to report against them, allows people to actively see what you are doing. This will open your judgements plans and results to those around you. Focus will help those understand what you are doing. As you pay attention to something, those around you will as well. But it will also open you up to criticism. You have to be strong and allow those around to see your weaknesses as well as your strengths. As you deal with your weaknesses, you will model behavior for those around you to follow.

And discussing weaknesses is where I will go next.

Jim Sackman
Focal Point Business Coaching
Change Your Business – Change Your Life!
Business Coaching, Sales Training, Marketing Consultant, Behavioral Assessments, Business Planning

http://www.jimsackman.com/

Sonoma County: News and Notes

Just a reminder that I am going to be offering a new Online Program called the Green Belt Business Mastery Course starting May 7th. The target audience for this is businesses that would like to have a Business Coach but feel unable to afford 1 on 1 coaching. This is the first in a series of courses running from Green Belt to Black Belt as well as some specialty Black Belt Classes. If you are interested or know someone who might be, feel free to contact me at jsackman@focalpointcoaching.com for more information. You can also find HERE a document that shows the curriculum for the Green Belt!

This week I want to give you a note about a couple of upcoming events. First off is the YPN Professional Development Day on 4/30 from 1 – 6. This is a great way for anyone to learn about Business. You do not have to be a YPN member to attend, but there is a registration fee. Check out the YPN website for details on this event.

The second event is the Santa Rosa Chamber Showcase. This event will be held at the Wells Fargo Center on May 7th. This is a great opportunity to meet other local businesses and learn about them. I will be there so look me up!

The thing I want to point out here is the ways that Marketing happens at these events for both the booth renters and the attendees. If you are going to go there, it is important that you use your time wisely. As a booth renter, you have the obvious part of being able to display your products and services. But you need to make sure that you have a couple of other items. First, Promotional Items as giveaways. This helps get more traffic to your booth and gives a reminder to those that visited about you. The second thing you need to have is a drawing. This giveaway (and collect Business Cards for it) gives you a chance to follow up with the person later.

As an attendee, it is important to talk to the people in the booth about their products and services. Do not try to market to them at that time. It is their opportunity to market to you. But if a company is someone you want to do business with, it is a great opportunity to do some research on their business. This can be very helpful especially if this is the first time that you met the person. You can use your meeting on a follow-up contact as an Ice Breaker.

I hope you have noticed that both paragraphs contain the word follow-up. That is the most important part of this effort. Are you going to call them? Are you going to e-mail them? Are you going to write them? Don’t expect people to follow up with you. Follow up with them!

Just a reminder if you are interested in visiting a great BNI group come visit us at Legends at the Bennett Valley Golf Course on Fridays just before 7AM. The “Best Networkers In Town” would be happy to have you visit. Great way to meet around 40 Business People here in Sonoma County. If you want any other information about this let me know. We provide Breakfast and you get to meet 40+ Business Owners. Ask yourself: If I do business with just one of those people, how much revenue can I make. You can find the group HERE!

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

Change Your Business – Change Your Life!