Calix's Woes Will Continue Into Q4

Delays in broadband stimulus spending will continue to haunt Calix Inc. (NYSE: CALX) at least through the fourth quarter, and possibly longer.

Calix said Thursday that it now expects December-quarter revenues to be $88 million to $92 million, down from the $104 million analyst consensus tallied by Thomson Reuters . Earnings per share will be 5 to 9 cents, Calix officials said on Thursday's earnings call -- nowhere near the consensus of 21 cents.

The problem is that revenues from broadband stimulus wins are slow in coming -- very slow, possibly. Analysts mentioned on the call that there's talk of extending the American Recovery and Reinvestment Act (ARRA) project window to 2015, meaning it might take that long for some of the money to get to Calix.

Calix CEO Carl Russo stressed that it's not known what conditions would be attached to the extension or even if it would apply to all projects. But given the track record the ARRA has had so far, he's not optimistic. "I'm concerned many [projects] will drag out to that date, and it could be a higher percentage than not," he said on the call.

Last month, Calix told the world that ARRA delays would lead to a weak third quarter, and its earnings statement Thursday matched the predictions. Revenues for the quarter, which ended Sept. 24, were $83.7 million, and the company reported a net loss of $6.9 million, or 15 cents per share. Non-GAAP net income was 7 cents per share; Calix had promised 7 to 9 cents. (See Calix Still Awaits Stimulus Funds.)

Separately, here's a blast from the past: Calix officials said they're still awaiting Osmine certification in order to sell equipment into the former Qwest. (For a memory jogger from 2000, see Telcordia's Osmine Goldmine.)

That matters because CenturyLink Inc. (NYSE: CTL), which has been a Calix customer, is spending money -- but it appears to be concentrating on Qwest territory, said Calix CFO Michael Ashby. Calix expects to get its certification in the second quarter of 2012.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 4:50:48 PM
re: Calix's Woes Will Continue Into Q4

Near as I can tell, we went all of 2010 without even mentioning Osmine!

Then Ray broke the streak with his blog, "What's Telcordia Worth?" http://www.lightreading.com/document.asp?doc_id=203286

Teresa Mastrangelo (@broadbandtrends) had a great reaction on Twitter: "OSMINE still exists!"

paolo.franzoi 12/5/2012 | 4:50:46 PM
re: Calix's Woes Will Continue Into Q4



The US West part of Qwest has wanted Calix to have OSMINE to get installed for some time which is why Adtran Deploys and Calix Doesn't in that part of the business.

Access has to deal with a lot of legacy issues like POTS and that stuff is still OSMINED in all the RBOCs.  So, the wonderful network you talk about is cool but the old one still exists and will for a very long time.

AT&T outsourced their Access OSS to Alcatel (Gee...I wonder how that is going for the big E) and Verizon wrote their own for FiOS.  I do not see CL doing either of those things.  Will have to see how they pull it together over the long term.  Right now, they are running each unit separately.

You can say, "Well harumph there isn't a lot of business in that old stuff."  And it turns out that you are correct.  However, if you are Calix and want to get into say AT&T - would being OSMINED so that when Litespan finally keels over be a good thing?  Yep.



JohnMike 12/5/2012 | 4:50:46 PM
re: Calix's Woes Will Continue Into Q4

Let's see ... CenturyLink (nee CenturyTel) is an independent telco that, for the most part, did not implement Telcordia (nee BellCore) standards that the legacy Bell companies, like Qwest (nee USWest) did.

CenturyLink buys Qwest. So is CenturyLink now obligated to adopt Telcordia standards like OSMINE?

Even though OSMINE has been a good idea for running the circuit-switched network, such adoption of Telcordia standards is torturous, time consuming, and hugely expensive for the telco and its equipment vendors (while keeping Telcordia relevant and in business).

Is OSMINE still needed as networks migrate to flat, non-hierarchical, all-IP, multimedia cloud-like connectivity and transport facilities?

I'm just saying ...

JohnMike 12/5/2012 | 4:50:45 PM
re: Calix's Woes Will Continue Into Q4

I'm with you, seven! Been there, done that!

In front of telco audiences, I often like to start out with, 'You know the Lord created heaven and earth in seven days, but then again, he didn't have an installed base to worry about!'

I've been prognosticating on to the migration from circuit to packet for 5 years now, and that still has yet to get rolling in a big way. So your point is well taken.



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