After two disappointing quarters in a row, Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) got a shot in the arm this morning by beating earnings expectations for its first quarter.

Avici trumped analyst estimates by reporting revenues of $10.7 million and net losses of $5.6 million, or 44 cents per share -- 41 cents if certain one-time events are excluded -- for its first quarter ended March 31. Analysts polled by Reuters Research had the company pegged for revenues of $6.9 million and losses of 69 cents per share.

In the previous quarter, Avici had reported just $3.8 million in revenues, with losses of $9.7 million, or 76 cents per share. For its first quarter a year ago, Avici posted $6.4 million revenues and losses of $9.1 million, or 73 cents per share.

Avici stock was up 67 cents (17%) at $4.68 by midday today.

Avici continues to live an unpredictable life, because it relies on AT&T Corp. (NYSE: T) for nearly all its revenue. On top of that, its flagship product, the TSR core router, is intended for large installations and results in somewhat lumpy sales.

The first quarter was no exception, as Avici sold product to just two customers: AT&T and IP-Only Telecommunication AB (see Avici Wins in Sweden). Avici also picked up services revenues from partner Huawei Technologies Co. Ltd. Only AT&T represented more than 10 percent of the quarter's revenues, though, so the math suggests AT&T must have accounted for at least 82 percent of the revenues in the quarter. That's on a par with Avici's past results, but analysts are concerned Avici won't succeed unless it can add to its customer roster (see Avici Faces 'Binary' Future).

To that end, Avici's conference call with analysts today included a reminder that the company has begun pursuing smaller carriers -- "I call this playing for singles rather than home runs," CEO William Leighton said. Smaller carriers are more plentiful, make faster decisions, and provide good targets for Avici's smaller routers, the SSR and QSR (see Avici Intros Tiny TSR and Avici's Incredible Shrinking Router).

AT&T did mark some milestones during the quarter, including its first 40-Gbit/s trunk, deployed using Avici's Composite Link technology for aggregating physical links into one logical link. AT&T has also deployed multichassis versions of the TSR in five cities, "all of which follows a plan that I started several years ago," Leighton said. (He meant that literally. Leighton was the AT&T official who picked Avici for the network -- see Avici Cans Kaufman, Leans on Leighton.)

Leighton again asserted that Avici doesn't feel threatened by SBC Communications Inc.'s (NYSE: SBC) pending acquisition of AT&T (see SBC/AT&T: Possible Winners & Losers). The concern is that SBC, which isn't an Avici customer, would put a halt to AT&T's Avici-based buildout plans, but Leighton thinks SBC won't bother to change a network that's so far along in deployment and is working well (see SBC/AT&T: Possible Winners & Losers).

During the call, Avici announced chairman and former CEO Surya Panditi will leave Avici's board after the company's annual meeting, which is usually held in late May. A new chairman hasn't been selected yet. Panditi became Avici's CEO in 1997 and took over as chairman in July 2001, handing the CEO reins to Steve Kaufman; Kaufman was replaced by Leighton last year (see Surya Panditi).

Panditi tells Light Reading he has simply decided to take some time off. "Actually, we're going to do some traveling," he says.

The travel comment is interesting -- considering that Panditi also has a full time job as CEO at Polaris, which he's held since 2003 (see Polaris Picks Panditi as CEO). He won't comment on the status of that job but says to expect an update within weeks.

— Craig Matsumoto, Senior Editor, Light Reading