January 10, 2005
C-COR Corp. (Nasdaq: CCBL), which supplies hardware and software to cable operators, has fallen short of its revenue targets for the second quarter on the trot, but insists it's heading for a more positive 2005.
Having disappointed investors with its first-quarter numbers (see Vendors: Cable Clouds Are Clearing), the vendor this morning reduced its second-quarter estimates (see C-Cor Revises Q2).
In October, C-Cor said revenues would be between $62 million and $66 million, and its EPS between 0 cents and 4 cents. Now it says sales will come in at between $58 million and $59 million, and that it will record a net loss of between 5 cents and 7 cents per share.
On average, analysts had been expecting revenues of $63.75 million and an EPS of 5 cents.
In a hastily arranged conference call, CEO David Woodle assured analysts that the revenue target was missed largely because some project completion dates had slipped, and that the revenues had "moved out, not disappeared."
Woodle said the second quarter will also include costs related to some of C-Cor's recent acquisitions, especially that of video server vendor nCube Corp., and stressed that nCube revenues (about $50 million annually) were not included in the second quarter's numbers (see C-COR Completes nCube Buy). The CEO expects revenues to reach the "low to mid seventies" in the current quarter.
He also noted that the firm's restructuring, including the full integration of the five companies C-Cor acquired in 2004, was now complete, and that about 100 job cuts had been made as a result of the integration process. C-Cor now employs 1,487 staff worldwide.
Those five are nCube, metro ADM vendor Lantern Communications Inc., Ethernet transport gear maker Optinel Systems, and OSS firms Alopa Networks Inc. and Stargus Inc.
Investors seemed assured by Woodle's comments. In early trading the stock was down a few percentage points, but by early afternoon it was trading up 7 cents, about 1 percent, at $8.49, compared with Friday's closing price.
Analyst Steve Kamman at CIBC World Markets says that, while there's "no such thing as a good earnings miss, this one wasn't that bad," and believes C-Cor's acquisitions will start to pay off in the coming year.
"The companies C-Cor acquired had higher gross margins than C-Cor's traditional product line, and nCube is bringing substantial revenues with it, so as those flow in the revenues will improve," says Kamman, though he warns that the cable sector "is always choppy. For investors it's difficult to predict the cable market, and there's always been variability for companies in this sector."
C-Cor will release its full second-quarter results on January 20.
— Ray Le Maistre, International News Editor, Light Reading
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