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Corvis Morphs Along

Corvis Corp. (Nasdaq: CORV) has restructured its businesses in an effort to save cash and reach profitability, the company said Wednesday. And, in the process of remaking itself, Corvis leaves the impression it will focus more on its service provider business going forward.

"We've decided to further adjust the business and integrate the business and, in doing so, we will realize an annual cost savings of between $30 million and $40 million once all this is done," says Andy Backman, VP of investor and public relations for Corvis. Backman says the restructuring should be complete by the end of this year.

The company says it will cut about 200 jobs in the process, taking its headcount down to about 1,200. The cuts will save the company about $7 million to $10 million a quarter in operational expenses, Corvis's CFO Lynn Anderson said in a prepared statement.

The move wasn't at all surprising, given that the company is still digesting the acquisition of its service provider subsidiary, Broadwing Inc. (NYSE: BRW). Indeed, sources have recently indicated that CFO Anderson was spending a considerable amount of time in Texas, working on Broadwing's books (see Headcount: Buddy Can You Share a Line?).

The cuts are almost exclusively on the equipment side, leaving fewer than 100 people at the original Corvis business, according to Smith Barney analyst Alex Henderson.

The timing of the restructuring is interesting, though, given reports last week that Corvis was not among the winners selected by the government for its Global Information Grid Bandwidth Expansion project (see GIG-BE Winners Named). "Given its lack of success in GIG-BE, we believe the company has decided to go into 'hibernation' on the equipment side and focus on running Broadwing," Henderson wrote in a note to clients today.

Besides cutting jobs, Corvis will take a charge against earnings in both the third and fourth quarters of 2003. It expects to end fiscal 2003 with about $275 million to $300 million in cash and investments and to become profitable by the middle of next year.

The company will discuss additional restructuring details on its October 30 quarterly earnings conference call.

In fact, the company has undergone quite a transformation in the past few months. Here's a recap of the wild action since June:

  • June 13: Corvis forms C III, a joint venture of Corvis and Cequel III, a venture capital company; and then C III completes the purchase of Broadwing Communications, one of Corvis's customers, from Cincinnati Bell (see Corvis Completes Broadwing Acquisition).

  • July 29: Corvis becomes the only vendor to publicize that it was invited by Science Applications International Corp. (SAIC) to participate in the testing phase for the Optical Transport System (OTS) portion of the U.S. Defense Information Systems Agency's GIG-BE project (see Corvis Solo in Bake-Off Boast).

  • July 31: For its second fiscal quarter of 2003, Corvis reports $27.0 million in revenue and a net loss of $45.8 million, or $0.11 per share. The Broadwing subsidiary contributes $26.7 million of the company's $27 million in revenues, indicating that most of its business has shifted from equipment sales to services.

  • August 28: Corvis says it will raise more than $70 million in a private placement stock offering (see Corvis Looks to Sell More Stock and New Corvis Investors Unveiled). More than thirty institutional investors buy over 67 million shares of stock at $1.15 a share, giving the company about $73.2 million in new cash.

  • September 12: Light Reading reports that Corvis was not among the winners of DISA GIG-BE business. Corvis shares fall more than 25 percent on the news (see DISA Talk Bounces Stocks).

  • September 15: Corvis announces its return to the Nasdaq National Market System. In October 2002, Corvis transferred to the Nasdaq SmallCap Market as its common stock had not met Nasdaq’s $1 per share minimum bid price requirement for continued listing on the National Market (see Corvis Gets on Nasdaq National).

  • Today: Corvis shares jump $0.07 (4.83%) to $1.52 in early afternoon trading as the company announces it will further cut its costs and is striving to reach profitability by the middle of next year.

    — Phil Harvey, Senior Editor, Light Reading

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    skeptic 12/4/2012 | 11:24:58 PM
    re: Corvis Morphs Along July 31: For its second fiscal quarter of 2003, Corvis reports $27.0 million in revenue and a net loss of $45.8 million, or $0.11 per share. The Broadwing subsidiary contributes $26.7 million of the company's $27 million in revenues, indicating that most of its business has shifted from equipment sales to services.
    ----------------------------
    As a reminder, the Q2 report did not cover
    the operations of broadwing for the entire
    quarter. Only 17 days of Broadwing's operations
    are covered by the Q2 results.

    And with that sort of limited window into
    Broadwing's operations, its possible that their
    revenue & expenses could be overstated or
    understated.



    DCITDave 12/4/2012 | 11:24:55 PM
    re: Corvis Morphs Along great point. we'll have to wait until Oct 30 for more info.
    dave77777 12/4/2012 | 11:24:52 PM
    re: Corvis Morphs Along You only wrote this story because you've been itching for an excuse to use "morphs" in a headline
    newbee2002 12/4/2012 | 11:24:50 PM
    re: Corvis Morphs Along Still too many players around with truck-loads of cash, most are unprofitable, and probably never will. The telecom euphoria of the late 90s is gone forever.
    Anyway, Corvis' revenue is now bigger than Cien's and Sycamore's put together, and it will be profitable by mid 2004.
    sevenbrooks 12/4/2012 | 11:24:46 PM
    re: Corvis Morphs Along
    Newbee,

    I think you missed the point of Phil's article which is that Corvis may no longer be an equipment company.

    seven
    cfaller 12/4/2012 | 11:24:44 PM
    re: Corvis Morphs Along newbee2002 wrote:
    "Anyway, Corvis' revenue is now bigger than Cien's and Sycamore's put together, and it will be profitable by mid 2004."
    -----------------

    Yeah, and ExxonMobil's revenue is several times bigger than Corvis, what's your point? As long as you're not going to compare companies in the same sector, it doesn't really matter what numbers you trot out.

    Corvis equipment revenue pales in comparison to Ciena and Sycamore...
    sunra 12/4/2012 | 11:24:43 PM
    re: Corvis Morphs Along "Anyway, Corvis' revenue is now bigger than Cien's and Sycamore's put together, and it will be profitable by mid 2004."

    check your facts sunshine:

    CIEN Q3 = $68.5 M
    SCMR Q4 = $10.9 M
    CORV Q2 = $27 M ($300k in equipment..ha, ha, ha)

    79.4 > 27
    newbee2002 12/4/2012 | 11:24:42 PM
    re: Corvis Morphs Along << Corvis equipment revenue pales in comparison to Ciena and Sycamore...>>

    Sycamore has less revenue than Ciena which in turn has far less revenue than Nortel and they all are losing money. You got to give Huber credit for making such a wise move: acquiring Broadwing.
    newbee2002 12/4/2012 | 11:24:42 PM
    re: Corvis Morphs Along << check your facts sunshine:>>

    i did since I've followed all 3 for 4 years.

    << CORV Q2 = $27 M ($300k in equipment..ha, ha, ha)>>

    $27M is for 17 days. Before the acq, Broadwing quarterly revenue was ~ $200M. So mathematically you can add Cien's, Sycamore's, Tellium's, Riverstone's revenue together and it still comes out less than Corvis, hehehe...
    newbee2002 12/4/2012 | 11:24:42 PM
    re: Corvis Morphs Along My point is Corvis has nothing to miss. Although he is terrible as a saleman the acquisition of Broadwing shows how well Huber understands the telecom game. My Corvis holdings has gone up > 200% since they've announced the acquisition. As an investor I really have nothing to brag about ;)
    Page 1 / 2   >   >>
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