Rick Roscitt, Chmn. & CEO of ADC Telecom

This is a partial transcript from Your World with Neil Cavuto, December 4, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Nokia says that its phones still ain't selling. Wireless competitors say their business isn't exactly humming. And analysts, for what they're worth, still aren't sounding reassuring. But if my next telecom titan is worried, he isn't exactly saying. Rick Roscitt runs ADC Telecommunications, it's a big manufacturer of telephone and cable equipment. Now while losses and revenue slipped substantially for the company in the latest quarter, they did manage to beat some battered estimates, a sign maybe things are turning around? Let's ask the man who walked away from AT&T, while some were touting him a cinch to run the place.

Rick Roscitt. Rick, good to see you again, thank you for coming.

RICK ROSCITT, CHMN. & CEO, ADC TELECOM: Good to see you, Neil.

CAVUTO: What's happening in your world? Everyone is wondering when that starts to percolate. Is it?

ROSCITT: Well, I think it's starting for ADC right now, we think we are in the bottom of this market so we are calling it for ourselves, not necessarily for the whole industry, Neil. Yesterday, as you know, we announced our fourth quarter, and we beat the Street. We had a very strong quarter. We beat the Street revenue estimate by almost 10 percent. We beat earnings by two pennies a share and that was with one time adjustment for inventory. We would have beat them by almost a nickel if you don't count that. So we are feeling pretty good as we enter our new fiscal year, as we did enter this November with a very strong fourth quarter.

CAVUTO: As we take a peek at your stock, it's kind of endemic of your whole field here, the Wall Street community, is saying, that they are concerned that it is going to be a long time before there is light at end of that tunnel and that some of your primary customers, the BellSouth, the CIENAs, I guess, Time Warner Cable, they are not showing any pop either. So, if they are not showing any pop, you are in trouble. What do you say?

ROSCITT: Well, not necessarily true. I think we are not looking for any V-shaped recovery. I think it's unhealthy for this industry to grow too fast, to get ahead of itself. Having said that, we are counting on an steady rate of business from our big Bell companies that are buying from us, from the AT&T's and the Sprints of the world. We don't think there is any big V-shaped jump there, but we sell to the cable companies and there their Internet access business is growing remarkably, very fast. They're going to move into voiceover IP. We've got a software business that is red-hot. We're selling not only to wireless companies, to do billing and customer management, but we have had folks like airline frequent flier mile programs, ISPs who have come to us and said that they want our customer management billing system. So I think in our IP cable business, in our software business, we can outgrow the market despite any weakness in telecom.

CAVUTO: Let's talk about cable, Rick, for a second here. AOL was making news this week, saying they believe in broadband, they're going to commit a great deal of attention and money to broadband. That's been one of your stronger areas, broadband connectivity business. How much do you have riding on whether AOL succeeds with that?

ROSCITT: Well, it is not just AOL. Of course, the biggest player in the cable space today is the new Comcast Corporation.

CAVUTO: Right.

ROSCITT: And we are a supplier to them as well. As we were to the AT&T Broadband business. We sell to Cox. We sold to Adelphia, still do. And I think they will emerge in one form or another.

CAVUTO: Now how will that work out with you, and C. Michael Armstrong because he will essentially be running that thing; right?

ROSCITT: Mike and I have a great relationship.

CAVUTO: Yes. You ever you took AT&T people? They ever say, Rick, come back?


ROSCITT: Not high on my list of agenda things to worry about every day, Neil.

CAVUTO: If it did come to that, I mean, I don't know who is left there right now, but I mean, would you ever entertain it or no?

ROSCITT: I'm moving forward with ADC. I think we really have hit our stride here. I think moving forward what you're going to see is that the software sector and the cable segment are really going to treat us well. Because we've got the right products. I'm very proud of the people who produced this fourth quarter. And, while I think it's going be a tough fight on market share, and spending will gradually improve, a little help from the economy, and a little help from either a fast resolution of the Iraqi situation or no resolution required at all, I think you will see the economy move into 2 1/2, 3 percent growth in the first quarter. And that always translates to more telecom demand.

CAVUTO: All right, we'll see what happens. Rick Roscitt, always good seeing you.

ROSCITT: Neil, why don't you bring that Your World show out here to Minneapolis. We've got a lot of great companies and we could host you.

CAVUTO: I just might. You might regret that offer. We will see what we do. Rick Roscitt, thank you very much.

ROSCITT: Thank you, Neil. Good to talk to you.

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