Proxim Suffers Revenue Plunge

Q4 revenues were $24.1M, down from $38.6M last year, for a net loss of $67.7M ($2.69/share), up from a loss of $36.1M ($2.94/share)

January 28, 2005

3 Min Read

SUNNYVALE, Calif. -- Proxim Corporation (NASDAQ:PROX) , a global leader in wireless networking equipment for Wi-Fi and broadband wireless, today announced financial results for the fourth quarter ended December 31, 2004. Revenue for the fourth quarter of 2004 was $24.1 million, consistent with the revised guidance range of $22 million to $24 million provided on December 29, 2004. This compares with revenue of $31.5 million in the third quarter of 2004, and $38.6 million for the fourth quarter of 2003.

Total revenue for the fiscal year ended December 31, 2004 was $113.7 million, compared to $148.5 million for the year ended December 31, 2003.

The net loss attributable to common stockholders computed in accordance with generally accepted accounting principles (GAAP) for the fourth quarter of 2004 was $(67.7) million, or $(2.69) per common share. This compares with a GAAP net loss of $(4.4) million, or $(0.36) per common share, in the preceding third quarter of 2004 and with a GAAP net loss of $(36.1) million, or $(2.94) per common share, in the fourth quarter of 2003.

The fourth quarter of 2004 GAAP net loss attributable to common stockholders included: (i) a non-cash induced conversion charge of $44 million related to the recent exchange of the Series A and Series B Preferred Stock held by Warburg Pincus and BCP Capital for shares of the Company's Common Stock and Series C Preferred Stock, and (ii) a non-cash charge of $12.2 million for the impairment of a portion of the Company's intangible assets.

The GAAP net loss attributable to common stockholders for the year ended December 31, 2004 was $(99.7) million, or $(6.42) per share, compared to the GAAP net loss of $(133.7) million, or $(10.99) per share for the year ended December 31, 2003.

The non-GAAP, or pro-forma net loss in the fourth quarter of 2004 was $(7.6) million, or $(0.30) per common share, compared to a pro-forma net loss of $(2.7) million, or $(0.22) per common share, in the third quarter of 2004, and a pro-forma net loss of $(2.5) million, or $(0.20) per common share, in the fourth quarter of 2003.

The non-GAAP, or pro-forma net loss for the year ended December 31, 2004 was $(18.6) million or $(1.20) per common share, compared to a pro-forma net loss of $(14.7) million or $(1.21) per share for the year ended December 31, 2003.

A detailed and specific reconciliation of the differences between the GAAP net loss and the pro-forma net loss is included in an accompanying financial table.

Factors contributing to the decline in the fourth quarter of 2004 revenue included the following:

  • Lower than expected Wi-Fi product revenue due to two primary factors:

    • An unforeseen Wi-Fi pricing action from Cisco Systems, Inc. and resulting pricing pressure; and

    • Delayed transitions from the ORiNOCO AP-2000 platform to the ORiNOCO AP-4000 platform primarily within key OEM accounts;

  • Unexpected MP.11 Model 5054R product availability issues that prevented product shipments of several orders; and

  • Lower than expected wireless carrier revenue due to continued carrier consolidation and delayed deployments.



"We remain encouraged by our market opportunities, particularly in the municipal area network, last mile access, mobile enterprise and education markets," said Kevin Duffy, President and Chief Executive Officer at Proxim. "We are particularly pleased with our point-to-multipoint MP.11 product, which is our precursor to WiMAX, which grew more than 10 percent sequentially."

Proxim also announced today that it has engaged Bear, Stearns & Co. to explore strategic alternatives for the company, including capital raising and merger opportunities.

"In light of the recent consolidation in the wireless networking industry coupled with the significant market opportunities that we see, Proxim believes that it is appropriate to explore all avenues that could enhance our ability to take advantage of these opportunities," said Frank Plastina, Executive Chairman of Proxim.

Proxim Corp.

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